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Postal Update: DC Circuit Issues Decision in Exigent Rate Case Appeal

On Tuesday, May 24, the D.C. Circuit issued its decision in the exigency rate case appeal.  The decision, while not a complete win for the Postal Regulatory Commission (“PRC”), did find for the PRC on the central issue of the case: the need for an exigent rate increase to be causally related to an exigent circumstance, here the recession of 2007-2009.  The court agreed with the PRC and the mailers (including MPA) that the requirement in the Postal Accountability and Enhancement Act (“PAEA”) that an exigent increase be “due to” the exigent circumstances requires a causal nexus between the exigency and the increase.
 
The Court did remand the case to the PRC for reconsideration of one issue:  how tight the link between the claimed exigency and the exigent rate increase must be when  a financial crisis has multiple causes, one of which is extraordinary or exceptional, and others of which are longer-term or structural.  (As you know, some of the latter causes are the $5+ billion annual payment to the Health Benefit Fund required by PAEA, the long-term decline in mail volume, and the rigidity of the Postal Service’s costs.)  The Commission, according to the court, assumed that PAEA requires a tight nexus in these circumstances as a matter of law.  The court disagreed, finding that the statute left this issue to the Commission’s expert discretion, which the Commission must exercise by making findings on the issue.
 
The Commission, Senator Collins and the Postal Service all expressed satisfaction with the decision yesterday.  The PRC, citing the court’s key finding, stated: “The commission is pleased that the court affirmed the commission's findings that a causal relationship must exist between the exigent circumstances and the amount of the proposed rate increases, and that the Postal Service failed to show that relationship.  The case will be remanded to allow the commission to exercise its discretion to clarify to what extent the Postal Service must show how proposed rate increases relate to the exigent circumstance's impact on the Postal Service's finances.”
 
Senator Susan Collins, who filed an amicus brief in the case urging the Court to uphold the PRC’s rejection of the requested rate hikes, called the decision “a win for American postal customers.”  She stated, “I am pleased the court correctly upheld the Postal Regulatory Commission’s decision – and my belief – that the Postal Service needs to prove that the exigent circumstances caused the effects that it claims necessitated a rate increase above the rate of inflation.”
 
The USPS had a different take.   A USPS spokesperson told reporters that “We are encouraged by the court’s decision.  While we continue to evaluate the court’s opinion and ruling to understand the full implications and options it presents to the Postal Service, we have renewed confidence that we are entitled to a rate increase.”
 
MPA agrees with the Commission and Senator Collins.  It is important to emphasize that the court did not limit how close or tight the causal nexus that the Commission may require between the exigency and the rate increase.  The court decision allows the PRC to reach its original result on reconsideration – just with a fuller explanation.  The judicial precedents cited by the court give the Commission wide discretion in resolving this policy issue on remand, and will entitle the Commission’s policy judgments, if explained with adequate clarity, to great deference in any further appeal to the court. 
 
Unless the USPS or an intervenor asks the court to rehear its decision—relief that the court rarely grants—the case will return in a few weeks to the PRC for reconsideration and additional findings by the Commission.  The court decision does not set a time limit for the PRC to issue a new decision.  The Commission will establish a procedural schedule and has leeway to decide whether to solicit more comments from the parties. 
 
MPA and the Affordable Mail Alliance will prepare comments to the Commission if such an opportunity is provided.  We agree with Senator Collins, who in her statement urged the PRC “to require that the nexus between the exigent circumstances and proposed rate hike be close” so as not to undermine the purpose of the 2006 statute to establish and maintain stable and affordable postal rates.