June 5, 2015

Today, we received the much-anticipated decision by the court on the 4.3 percent exigent surcharge that all mailers have been paying.

The US Appeals Court ruled today that the Postal Regulatory Commission (PRC) was reasonable to determine that the impact of the 2007-2009 recession is exceptional only for a limited time until it becomes the “new normal.” In other words, we prevailed on our most important endeavor—that the exigent surcharge will not be permanent.

Here is a key part of what the court said:

“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.”

On the other hand, as we predicted following the September 9, 2014 oral arguments, the court remanded the case back to the PRC to do more work on its methodology to determine how much lost volume and revenue should be counted and therefore recovered through a surcharge. They did this by rejecting the PRC method called “count once” which the court described as: “In enforcing a “count once” limitation for lost mail, the Commission refused to recognize the cost to the Postal Service of lost mail volume beyond the year in which it first disappeared.”

Left unsaid by the court was whether the current surcharge will be removed around early August; that important decision should be made by the PRC in short order.

We will keep you posted.