Five Brushes with Disaster in the Last Five Years

 December 31, 2019



  1. USPS attempt to make the exigent surcharge permanent


From January 2014 to April 2016, the U.S. Postal Service collected an extra 4.3 percent above inflation on all postage rates.  The surcharge was granted by the Postal Regulatory Commission under the exigency section of postal law in order to relieve the USPS of the impact of the 2007-2009 economic recession.  The Postal Service received an addition $4.6 billion from its customers.


The Postal Service made the case to both the PRC and the U.S. Court of Appeals that the surcharge should be permanent, even though the recession was temporary.  The Alliance and many allies provided ample evidence in opposition to the USPS position. Fortunately for nonprofit mailers, both the regulator and the court ruled that the surcharge should remain temporary.


Nonprofit Standard Mail did not escape either the recession or the surcharge unscathed.  In fact, the combination of the two reduced NPSM from approximately 15 billion annual pieces to 12.5 billion.  While this volume has not recovered, one can only speculate how much more damage a permanent, repeating surcharge would have done.


  1. Large rate increases on certain nonprofit periodicals


In 2015, apparently inadvertently, the Postal Service raised rates on Periodicals with little to no editorial content several times the rate of inflation.  It happens that many of these publications were mailed by nonprofits.


Nonprofit mailers only became aware of the increase weeks after USPS announced the new rates, and the USPS seemed surprised with them.  Several nonprofit publications shut down, and related employees were in some cases laid off.  The Alliance communicated the impact of the apparent mistake to postal management.


The good news from this is that since 2015 the Postal Service heeded our suggestion that it run numbers on hundreds of individual publications before it proposes new rates.  This ensure that the USPS does not again inadvertently impose excessive rate increases on very desirable publications from the point of view of the mailers and the recipients.


  1. USPS proposal to change the formula for nonprofit rates


As part of a series of “technical” adjustments to clean up its ratemaking procedures, the Postal Service proposed a change in the calculation of nonprofit Standard Mail rates relative to commercial rates.


Most of these “car wash” proposals go largely unnoticed by USPS customers.  But on further analysis, the Alliance found this one to result in rates for nonprofits several percentage points higher than the status quo.


Fortunately, an outpouring of response from the nonprofit sector, with quantitative and qualitative analysis, led the regulator to reject the USPS proposal.  Another brush with disaster averted.


  1. USPS proposal to outlaw nonprofit premiums


Inexplicably, and without prior warning or consultation, the Postal Service published a Federal Register Notice of a rule change it was “contemplating” to outlaw all physical content from Standard Mail except for paper letters.  While it may have been targeting other types of mail, the proposal took dead aim at one of the most important and valuable elements of nonprofit mail.


An important tool for nonprofits, and a major advantage of physical mail over digital alternatives, is the mailing of low-cost but significant “premiums.”  Premiums are used on both the front and back-ends to encourage donations, memberships, and loyalty to a cause.


An 18-month process ensued, in which the Alliance participated with its legal opinion sent in response to the Federal Register Notice, encouraging nonprofits to also comment, a workgroup within the Mailers Technical Advisory Committee, and informal discussions.  Ultimately, USPS listened to its customers and sidelined the proposal.


  1. PRC ten-year regulatory review


The granddaddy of all threats to the continued use of mail by nonprofits has been the regulatory review mandated by the 2006 postal law ten years after its passage.  The Postal Regulatory Commission started the process three years ago.  After receiving rounds of comments, the Commission made a proposal two years ago.  The PRC proposal was to add three layers of surcharges on top of the Consumer Price Index the 2006 law instituted.


The regulator received many comments in two rounds following the proposal.  The Alliance filed probably the most comprehensive set of comments and analysis in cooperation with our members and other mailer associations.  The overwhelming response from the USPS customer base was against the proposal.


The PRC took no further action until making another proposal this month.  While the temporary reprieve for mailers has been a relief, the looming threat of removal of the discipline and predictability of the inflation price cap has been ever present.