2. Omnibus Rate Case: Docket No. R2000-1
As a result of Docket No. R2000-1, filed with the Postal Rate Commission in January 2000, the prices the Postal Service charges for products and services offered to the public increased an average of 6.3 percent. These increases were implemented in two stages. In the first stage, rates and fees increased an average of 4.6 percent on January 7, 2001, when the Postal Service implemented the Postal Rate Commission’s recommendations under protest. An additional average 1.6 percent rate increase was implemented on July 1, 2001, as a result of the Postal Service Governors’ determination that the rates recommended by the Commission would not provide enough revenue to maintain the financial integrity of the Postal Service.

The Commission issued its first Docket No. R2000-1 Recommended Decision in November 2000, ten months after the Postal Service filed its request. The Governors determined that the rates and fees that the Commission recommended would have resulted in a revenue shortfall of approximately $1 billion. After considering their statutory options, the Governors decided to allow the Commission’s recommendations to take effect “under protest” and to return the case to the Commission for reconsideration. Although in its second Recommended Decision the Commission agreed with the Governors on several technical points, it recommended limited changes that did not correct the projected revenue shortfall. The Governors responded by rejecting it and remanding the case to the Commission for another round of reconsideration.

When the Commission’s third Recommended Decision did not address the issues raised by the Governors and correct the projected revenue shortfall, the Governors in May 2001 chose to modify the decision. Under the Postal Reorganization Act, the Governors must ensure that postal revenues are sufficient to cover total estimated costs. If the Commission recommends rates that are insufficient, the Governors have a limited ability to change or modify those rates to correct the revenue imbalance. Any decision to modify a Commission-recommended decision must be unanimous, with all Governors voting in favor of the modified rates. The Docket No. R2000-1 case was only the second time that the Governors have found it necessary to modify a Commission-recommended decision in an omnibus rate case. The Postal Service implemented the modified rates on July 1, 2001.

Two petitions to review the Governors’ modification decision were filed in the U.S. Court of Appeals, but both petitions were withdrawn shortly after filing, leaving the modification unchallenged in the courts.