A three judge panel of the U.S. Court of Appeals for the District of Columbia yesterday set April 11 for oral arguments in a consolidated lawsuit challenging this month’s increase in U.S. Postal Service rates.
The rate increase, averaging 3% for commercial mailers and 20% for nonprofit mailers went into effect on Jan. 10, and is expected to generate an additional $1.8 billion in revenue.
In July, shortly after the postal service’s Board of Governors, acting on the recommendation of the Postal Rate Commission, approved the rate increase, the Alliance of Nonprofit Mailers and United Parcel Service each filed lawsuits, which were later consolidated by the court, attacking the rate increase.
The Alliance accused the USPS of discriminating against nonprofit mailers because of the disparity of increases between commercial and nonprofit rates. It also questioned the postal service’s need for additional revenue after it posted surpluses of more than $1 billion between 1995 and 1997.
Based on those surpluses, plus last year’s $600 million profit, “the rate case should never have been filed [with the PRC], approved by postal governors or implemented by the postal service,” said Neal Denton, the Alliance’s executive director.
He said the group’s general counsel, David Levy, will urge the court in his oral argument to overturn the rate increase because of the differences in the way the USPS determines its costs of processing commercial and nonprofit mail. The USPS, according to Denton “claims that its costs for processing Standard A (formerly third class nonprofit) Mail shot through the roof while the costs for processing commercial Standard A Mail went down.” That, he added “just doesn’t make sense.”
Atlanta-based UPS, which competes with the USPS in domestic and international package and document delivery, alleged in its suit that the postal service’s rates for parcels do not accurately reflect its true processing and delivery costs because they are subsidized with revenues from other classes of mail.
Lawyers for the shipper are expected to urge the court to direct the USPS to either raise their parcel rates to reflect their true costs or show conclusively that they are accurate and are not subsidized by other classes of mail.
Daniel Foucheaux, the postal service’s chief counsel for rates, was unavailable for comment.
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