Washington, D.C., United States (AHN) – The U.S. Postal Service might still have a chance to raise its rates by more than 5 percent after a federal court ruling this week.
The Postal Service tried to raise its rates earlier this year but the plan was rejected by the Postal Regulatory Commission, which oversees the agency.
The U.S. Circuit of Appeals for the District of Columbia ruled this week that the Postal Regulatory Commission must better explain why it rejected the proposed rate increase before it can block a rate increase for the nation’s mail.
“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 under the exigency provision,” the Postal Service said in a statement.
The dispute is further evidence of the Postal Service’s failing fortunes as electronic mail and the nation’s staggering economy take a deep bite out of its finances.
The Postal Accountability and Enhancement Act of 2006 says the Postal Service can raise postage fees no more than the rise in the Consumer Price Index. The index represents an average price for typical consumer products, such as gasoline and some food items.
However, the federal law grants an exception for “either extraordinary or exceptional circumstances.”
Attorneys for the Postal Service argued that the recession that began in December 2007 created the “extraordinary” circumstances that would justify raising postage rates above the consumer price index.
The recession resulted in lower mail volume, which hurt the Postal Service’s revenue.
Before the Postal Service can raise its rates, it must apply for permission to the Postal Regulatory Commission. The commission is an agency whose leaders are appointed by the president.
The Postal Regulatory Commission denied the Postal Service’s request to raise rates above the consumer price index. The commission said the Postal Service failed to prove its drop in revenue was “due to” the recession. The “due to” proof is required by federal law.
Other factors that traditionally have hurt Postal Service revenue include e-mail and competition with private mail carriers, such as UPS and FedEx.
The U.S. Circuit Court of Appeals said the Postal Regulatory Commission relied on “ambiguous” language in the federal law.
“It incorrectly concluded the plain meaning of that ['due to'] phrase requires the proposed rate adjustments to be ‘tailored to offset the specific effects of the claimed exigency,’” the court’s ruling said.
The court concluded that the Postal Regulatory Commission must better explain why the Postal Service’s request to raise rates by 5.6 percent is unjustified before the postage increase can be blocked.
The court dispute follows by days a dismal quarterly report from the Postal Service that showed it lost $2.2 billion in the second quarter of fiscal 2011. The Postal Service lost $1.6 billion in the same quarter of last year. Mail volume fell another 3 percent in the second quarter of this year.
Bad business is forcing the Postal Service to look harder at touch choices, such as ending Saturday mail service and asking Congress for a financial bailout that could reach $90 billion, according to policy analysts.
However, Postal Service officials have made a strong case for themselves in recent congressional hearings.
The estimated 170 billion pieces of mail they handle each year come from companies and individuals worth about $10 trillion. Many of the companies rely heavily on the Postal Service to continue operating.
The Postal Service also employs 520,000 workers on no taxpayer subsidies. The Postal Service is the nation’s second largest employer, surpassed only by Wal-Mart.
View full post on All Stories