SIIA/ABM joins appeal of recent Postal Service rate hike

D14-1-28-LeDucraft postal reform legislation would dramatically increase rates for mailers

by David LeDuc, Senior Director, Public Policy, SIIA

Jan. 28, 2014 – As reported in late 2013, SIIA/ABM and other companies throughout the business media world were very disappointed that the Postal Regulatory Commission (PRC) announced its approval of an exigent rate increase of 4.3 percent, which combined with the previously approved CPI increase of 1.7 percent equals a 6.0 percent rate increase.

On Thursday, January 23, 2014, SIIA/ABM joined with a broad coalition of postal customers and suppliers in filing an appeal to overturn the PRC exigent rate increase. The appeal is sponsored by companies and mailer groups that represent every major class of mail and the majority of mail volume. The PRC justified the rate hike as an emergency measure to offset losses the 2007-2009 recession inflicted on the USPS. However, it is argued that the main cause of the Postal Service’s losses in recent years is the public’s increased use of the internet instead of mail, coupled with the continued inefficiency of postal service operations. The legislation as it exists was designed to prevent the Postal Service from recovering this kind of loss through above-inflation rate increases.

On the legislative front, SIIA/ABM has been working on its own, and with other mailing groups, over the last three years to pass postal legislation that will “right-size” the postal service, guard against service standard degradation, enact needed reforms and protect the current CPI-based postal rate-cap. SIIA/ABM has also been working alongside other stakeholders representing classes of mail the postal service has deemed not to meet attributable costs in order to oppose any additional rate increases of such.

While these efforts have produced a Committee-passed bill in the House that meets these objectives, that legislation has been stalled since mid-2013. In the Senate, postal reform legislation has taken a different track, with proposals of postal rate increases and dismantling of the PRC. Specifically, the latest draft of the Senate legislation would make permanent the recent 4.3% exigent rate increase (as compared to its current limited 2-year duration), change the CPI-based rate cap to CPI+1 and would essentially remove the PRC from its important role in reviewing the rate cap in 2017. These changes, among many others, could result in significantly higher rate increases for mailers in the very near future, and would all but eliminate the one remaining independent check on USPS’s pricing power.

SIIA/ABM strongly opposes this provision and is working with mailing industry partners in support of an amendment being offered by Sen. Tammy Baldwin (D-WI) to remove it. The legislation is currently scheduled to be considered by the Homeland Security & Government Affairs Committee Wednesday, Jan. 29. If your company has a presence or connection to any of the states represented by Members of this Committee (AK, AR, AZ, DE, KY, LA, MI, MT, NH, ND, OH, OK, WI, WY) your help is critically needed to reach out to those offices before the committee meeting to encourage them to support the Baldwin Amendment. We are happy to work with you to facilitate this outreach and message delivery, so please send me an email (at dleduc@SIIA.net) or call (at 202-789-4443) to coordinate.

We are hoping to schedule a call among interested members soon to discuss this issue and get feedback regarding potential next steps. In the meantime, please do not hesitate to contact me with questions or to discuss.

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