On September 27, the American Catalog Mailers Association filed a motion with the Postal Regulatory Commission asking it to waive a rule regarding cost coverage. The commission’s rule (39 CFR 3030.221) requires that
“Whenever the Postal Service files a rate adjustment filing affecting a class of mail which includes a product where the attributable cost for that product exceeded the revenue from that product, as determined by the Commission, the Postal Service shall increase the rates for each non-compensatory product by a minimum of 2 percentage points above the percentage increase for that class.”
In the FY 2022 Annual Compliance Determination, the PRC had concluded that
“… the USPS Marketing Mail Carrier Route product did not cover its attributable costs and thus was a non-compensatory product in the compensatory USPS Marketing Mail class. In fiscal year (FY) 2022, the Carrier Route product’s cost coverage was 99.4%.”
Consequently, in a rate filing, the USPS would need to propose Marketing Mail Carrier Route prices that were two percentage points above whatever it would propose for the class generally. Compliance with this requirement was, in fact, demonstrated in the rates proposed by the Postal Service on October 6.
In its motion to waive the requirement, ACMA argued that
“… because Carrier Route nearly covered its attributable cost in FY 2022 and has received above-average price increases in FY2023, there is greater risk that volume will decrease due to further above-average price increases and cause significant negative effects than that the product will still be non-compensatory in FY 2023. ACMA also argues that the regulations were developed with one annual price increase in mind, and because the Postal Service has been filing price increases twice annually, such a scenario was not envisioned when the rules were adopted and creates ‘the risk of overcorrecting for unprofitability by making the rate unreasonably high and deterring customers from using the product.’”
Two comments were filed. PostCom supported the waiver, stating that it would “impose no harm on the Postal Service” and would “protect vulnerable mailers from unnecessary price increases.” The Postal Service supported the motion as well, but only for future price filings.
The amount of money involved was relatively small, and granting the waiver would not have sent the Postal Service back to the drawing board.
Nonetheless, in an order issued on October 23, the PRC denied the motion as moot, essentially because the Postal Service has already completed the development of its price changes (in compliance with the PRC’s regulation) when the motion was filed. (The USPS governors approved the proposed prices a week after the motion was made, and the price filing was submitted two days later.) The PRC added:
“Should circumstances warrant, the Commission would consider the future submission of such a motion if filed sufficiently in advance of the commencement of a rate adjustment proceeding to ensure full and fair adjudication prior to the commencement of the expedited proceeding to evaluate the Postal Service’s proposed rates.”
Though the commission could have granted the waiver, it (likely its legal staff) chose to play it safe and found a ready basis to deny the motion. In this case, the message seems to be that if there’s a motion to be made about waiving a commission rule, don’t wait until the last minute to file it or give the PRC’s risk-averse lawyers any other reason to deny it.
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