June 26, 2015

It is time to bring to a close the Postal Service’s five year campaign to extract as much excess, above-inflation revenue as possible from postal customers. The USPS thinks otherwise and has asked the PRC to re-litigate the “new normal” principle that the court affirmed and did not vacate or remand to the regulator. We filed comments supporting the expedited schedule the PRC established and limiting consideration to the recalculation of lost contribution that occurred before the “new normal” was reached.

While a regulatory agency is allowed to reconsider any issue on remand, the court was clear in its strong support of the PRC’s construct of the “new normal” standard. Here is an excerpt from the court’s ruling on the “new normal:”

“Given the Accountability Act’s central focus on tightly restricting Postal Service rate increases and increasing efficiency, the Commission sensibly concluded that the statutory exception allowing higher rates when needed to respond to extraordinary financial circumstances should only continue as long as those circumstances, in fact, remained extra-ordinary. The Commission’s “new normal” test is designed to capture precisely the time when the exigent character of a circumstance dissipates—when its effects lose their exceptional character—even though the effects in some literal, but-for causal sense linger. In other words, the Commission permissibly reasoned that, just because some of the effects of exigent circumstances may continue for the foreseeable future, that does not mean that those circumstances remain “extraordinary” or “exceptional” for just as long.”

In addition to supporting a limited, expedited proceeding, our filing with the PRC on June 26 also warned against opening Pandora’s Box: “Finally, if the Commission were to reopen the record for reconsideration of the “new normal” limitation, the record should also be reopened to consider other previously-raised issues that are likely to warrant reducing the allowed exigent surcharge.”