The U.S. Postal Service is gonna have to give back some money it received from its “exigent” rate increase last year.
The U.S. Court of Appeals for the District of Columbia Circuit just ruled that the 4.3% increase that took effect in 2014 cannot last forever and that the USPS will have to roll it back. But it didn’t say when.
On Christmas Eve, 2013, the Postal Regulatory Commission found that the USPS had lost about $2.8 billion during the recession of 2008 and OK’d its request for a 4.3% rate hike but only until the postal service recouped this money. By last March, the USPS had amassed about 80 percent of it.
Casting aside for a moment the actual legal process for rolling back this increase one wonders if this ruling
will really make any difference to the operations and long-term prospects of the USPS.
Just look at how the postal service has had to scrounge for money by closing facilities, laying off workers and trying out new commercial ventures, many of which have been unsuccessful. Now it my have to try harder, I guess.
This ruling delighted commercial mail lobbying groups to no end. Several of them had filed legal challenges to this increase.
Overall, the mailing industry had fought for at least 11 years to get a stable predictable rates structure which came about in the Postal Accountability and Enhancement Act of 2006, which tied annual rate increases to the Consumer Price Index. Those increases usually ended up at less than 2 percent.
That same law also allowed the USPS to file for exigent rate increases when it felt overall economic conditions warranted them.
Nearly every year since the law took effect in 2007 the USPS filed for such an increase and was rejected every time until 2013 when regulators finally caved and did so big time.
The current rates are set to expire in August but it’s unclear if and when they’ll actually be rolled back since the court sent the case back to the PRC for further review.
Most likely the USPS will have to go back to its former rate formula and will continue to run up massive deficits as it pretty much has done since 2006. It also may be forced to come up with some new money-raising gimmick and quickly.
Or maybe not. The bureaucratic process involved with possibly rolling back rates is likely to take a long time and involve things like filing comments, legal briefs and other cumbersome steps.
Given this legal limbo it’s unlikely Congress will weigh in especially before next year’s Presidential elections.
The most damaging aspect of the supposedly reforming PAEA measure is the postal service’s annual obligation to pay more than $5.8 billion a year to cover the healthcare costs of future retirees for 75 years.
This more than anything provision has bankrupted the USPS. No rate increase whether exigent or not is going to make any financial difference at all. Without this burden the public USPS would likely be profitable again.