Chances are good for a negotiated agreement between The U.S. Postal Service and major mailers on a proposal that would raise rates by an average of 8.7% next year. The USPS informed the Postal Rate Commission Friday of its progress.
Postal officials, reporting on informal discussions with representatives of the organizations, companies and individuals participating in the current rate case, said that they all agreed that “a settlement should be pursued.” They also said that the potential existed for a “joint stipulation and agreement that the PRC could base its recommendations [on the rate increase] to the postal service’s Board of Governors.
If such an agreement were reached, it would mark the first time in recent memory that a major rate case pending before the PRC was resolved in this way. It generally takes 10 months — with at least seven months spent on testimony, oral and written legal arguments — before the PRC files its recommendations with postal governors. But a negotiated agreement could cut that time down to less than six months, paving the way for the proposed increase to kick in by early Spring.
The idea of a possible negotiated agreement was raised by George Omas, the PRC’s vice chairman, late last month after meeting with rate case participants. Omas is presiding over the PRC’s hearings on the proposal, which just began.
Omas cited the Sept. 11 terrorist attacks in New York and Washington and the discovery of anthrax in the mail stream and at a number of postal facilities, saying that this was not the time for “business as usual” and that a mutually developed “settlement might be the right course of action” in this case.
The Direct Marketing Association is “clearly going to be working with everyone on a settlement,” said Jerry Cerasale, senior vice president, government affairs. With the USPS asking for $6.1 billion in new revenue, he estimated that it would take time to develop an agreement. “If it is fair and reasonable, we will back it 100%,” he added.
Neal Denton, Alliance of Nonprofit Mailers executive director, said he was “cautiously optimistic” about the prospects of a settlement agreement because while the USPS is “hurting financially, mail users, catalogers, direct marketers, direct mail fund raisers and nonprofit mailers are on their knees right now and can’t afford additional rate increases sooner than proposed.”
But with the cash-strapped USPS on the verge of asking Congress for an emergency appropriation of several billion dollars to with anthrax and the threat of terrorism, Vermont-based postal consultant Bill Hoyt said Omas was “hitting the panic button because there is “no connection in the world between this settlement thing and the current national emergency.”
Hoyt said he “disagreed with any settlement in the rate case” because it should be fully litigated before the PRC in the usual way.
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