Summary of Rate Review Comments (By parties other than Alliance of Nonprofit Mailers, MPA—The Association of Magazine Media, and Postcom—The Association for Postal Commerce)

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Lengthier comments

American Catalog Mailers Association:  Generally supportive of our position.

American Bankers Association:  Supports our position.

American Forest & Paper Association:  Supports our position.

American Postal Workers Union:  Demand for mail is price-inelastic.  PRC lacks authority to change collective bargaining system.  Limits imposed by Section 3622(e) on work-sharing discounts are outside the scope of the 10-year review because Section 3622(e) is a different subsection than Section 3622(d)(3).  Sen. Collins made clear that the CPI cap was covered by the 10-year review.  The USPS can’t survive with a price cap.  The USPS “has largely realized all the efficiencies it can.”  USPS has slashed costs, and service is now suffering.  The Commission should eliminate the CPI cap and allow the USPS to file a “true up” rate increase “outside of the restrictions of any old or new rate-making system.”

Congressmen Chaffetz and Meadows:  Argue for full pass-through of work-sharing discounts; don’t mention any other issues.

Connectiv (a division of Software & Information Industry Association, formerly American Business Media):  Generally supportive of our position, although renews traditional ABM complaint that small-circulation publications can’t qualify for deep discounts.  The Commission should require the USPS to charge profit-maximizing prices for competitive products.

DMA, ACMA, AF&PA, PostCom, EMA, GCA, IDEAlliance, PSA, SMC:  Consistent with our position.

eBay:  Supports keeping the CPI cap.

EMA Foundation:  Supports keeping the CPI cap.

Greeting Card Association:  Generally supports our position, although defends 3622(e) limit on work-sharing discounts.  Supports argument that the CPI cap is inviolate in the 10-year review.

Mailers Hub LLC and the National Association of Advertising Distributors:  PRC should replace CPI cap in favor of a better index (not identified).  Allow USPS to recover increases in its input costs “only to the extent that those costs are in reasonable alignment with those of comparable businesses.”  Allow higher increases if necessary to avoid deterioration of service.  Allow extra-cap increases when needed to recover “uncontrollable” costs like the prefunding requirement.

Major Mailers Association, National Association of Presort Mailers, National Postal Policy Council:  Supports keeping CPI cap; workshare discounts should be set equal to costs avoided; USPS should be required to conduct cost-benefit analysis of changes in mailing requirements; the exigency provision should be interpreted consistent with its purpose; and market-dominant NSA rules should be revised to reduce difficulty to approve.

National Association of Letter Carriers:  Eliminate the CPI cap in favor of an unspecified “system for regulating market dominant rates that allows USPS to charge prices that – while still reasonable and fair – would generate enough revenue for USPS to achieve the financial stability it needs to continue to fulfill its mission of providing prompt, reliable and universal service.”  Also, allow a one-time “true up” rate case.

• Attached to the NALC comments is an update of a 2010 OIG paper by Cohen, McBride and Waller.  The paper claims that the USPS won’t be able to achieve breakeven and meet its statutory obligations by 2012 unless it can raise its prices by more than inflation.

National Newspaper Association:  Opposes network realignment.  Supports one-time rate increase equal to half of the R2013-11 exigent rate surcharge.

National Postal Mail Handlers Union:  Supports elimination or loosening of CPI cap.

Netflix:  PRC should retain the CPI cap or at a minimum defer any changes until Congress acts.

Pitney Bowes and John Panzar (for Pitney Bowes):  Commission should require that work-sharing discounts equal 100 percent of avoided costs.

Parcel Shippers Association:  Generally supports current system, including CPI cap, but proposes several changes:  (1) PRC should find that Periodicals Mail is being subsidized, and should require the USPS to raise Periodicals rates; (2) work-sharing discounts should be set equal to avoided costs; (3) PRC should be vigilant not to disclose terms of competitive Negotiated Service Agreements.

PRC Public Representative:

• Argument section:  CPI cap should be adjusted by (1) adding Z factor to cover costs of prefunding retiree health benefits; and (2) another Z-factor term that adjusts prices annually to offset the impact of declining volumes.  In addition, rates for Marketing Mail flats and Periodicals Mail should be raised to cover 100 percent of attributable costs.  In addition, USPS borrowing authority should be restored; quality of service needs to be improved; and CPI cap should be trued up more often than every 10 years.
• Timothy Brennan declaration:  Proposes methodology for raising the CPI cap to offset declining mail volume.
• Lyudmila Bzhilyanskaya declaration:  USPS should file more detailed work-papers for its Total Factor Productivity (“TFP”) reports.  TFP is a limited concept; measures only short-run static productive efficiency.
• John Kwoka declaration:  Supports proposals in argument section.

Senator Ron Johnson:  PRC should finish case ASAP.  “Doing otherwise could further jeopardize the financial viability of the Postal Service and create greater uncertainty among the businesses and communities that depend on it.”

Saturation Mailers Coalition and other associations of community newspapers:  Keep the CPI cap.

Taxpayers Protection Alliance:  The Postal Service should receive more revenue (comments don’t say how).  Competitive products should pay more.

UPS:  The Postal Service should be required to charge more for competitive products.  The CPI cap should not be loosened.  If the CPI cap is loosened, however, the Commission should enforce higher service standards for market-dominant products.  Market-dominant revenue should be used only for market-dominant costs.

USPS:

• Argument section:  PRC has authority to modify or eliminate the CPI cap in the 10-year review.  If the current system does not meet objective 5, then the current system flunks.  Current regulatory system precludes USPS revenue adequacy.  Declining mail volume, trend to less profitable mail mix, and growing number of delivery points are together causing diseconomies of scale.  Available efficiency gains don’t come close to closing the financial gap.  European postal regulation provides a model for the Commission:  “regulatory monitoring, supplemented by a requirement that the Postal Service provide forward guidance regarding the magnitude and timing of rate increases.”  (Translation:  deregulate our rates.)  PRC should not require that work-sharing discounts be set equal to 100 percent of avoided costs.
• Appendix A:  reprint of 2015 USPS rebuttal to 2014 mailer white paper that argued that the Commission had no authority to make major changes to the CPI cap in the 10-year review.
• Appendix B:  Evercore paper analyzing the term “financial stability.”
• Appendix C:  Alvarez & Marsal paper arguing that the opportunities for USPS cost savings are limited.
• Appendix D:  Appendix D:  Paper by Christensen Associates on Total Factor Productivity.
• Appendix E:  Paper by Christensen Associates arguing that the current system isn’t achieving the objectives of 39 U.S.C. § 3622(b), especially objective 5 (revenue adequacy).
• Appendix F:  Appendix F:  discussion of the regulatory systems of Canada, Australia, France, Germany, and the UK.

• Appendix G (filed under seal):  Two charts of USPS projections of its losses and liquidity over 10 years under two different volume growth scenarios, assuming continuation of the current system of regulation.

Nonprofit declarations with ANM, Postcom, MPA comments

American Lung Association

Consumer Reports

Disabled American Veterans

Guideposts

National Wildlife Federation

Shorter comments supporting the CPI cap

Alzheimer’s Association

American Institute for Cancer Research

American Lung Association (in addition to declaration)

American Parkinson Disease Association

America’s VetDogs

Amnesty International

Association of Direct Response Fundraising Counsel

Catholic Charity Appeal

The Children’s INN at NIH

Christian Appalachian Project

Compassion International

Diabetes research and Wellness Foundation

Elks Magazine

Food for the Poor

Franciscan Mission Associates

Guide Dog Foundation

Jewish Voice Ministries International

Lupus Foundation of America

LSC Communications

Mindful

Oblate Missions

March of Dimes Foundation

Marine Toys for Tots

Minnesota Power

National Catholic Development Conference (Sr. Georgette Lehmuth)

National Children’s Cancer Society

Oblate Missions

PESI

Poor Handmaids of Jesus Christ

SOS Children’s Villages USA

Trinity Missions

WETA

Whitman Walker Health

Wounded Warrior Project

Shorter comments opposing the CPI cap

Alliance for Retired Americans et al. (Katherine E. Isaac)

APWU locals

David Yao (APWU shop steward)