USPS Ordered to Reduce $7.5M SoCal Edison Fine

(CN) - The U.S. Postal Service's $7.5 million fine of Southern California Edison for abusing bulk-mail privileges was excessive, a federal judge ruled Tuesday.

U.S. District Judge James Boasberg of the District of Columbia said that the fine was not the result of "reasoned decisionmaking."

The postal service provides discounted rates for bulk mailers, such as Southern California Edison, who are supposed to take steps to ensure their address lists are accurate. Edison took advantage of these rates while sending millions of pieces of mail to its customers at incorrect addresses, USPS said.

"Elvis Presley once sang, 'I write, "I'm sorry but my letter keeps coming back"/ So then I dropped it in the mailbox / And sent it special D / Bright and early next morning, it came right back to me.' In contrast to Elvis, SCE was apparently not quite so careful when addressing its mail, as USPS found that thousands of mail pieces per day were being returned to sender," Boasberg wrote.

The postal service calculated that the costs of Edison's errors at $0.62 per each piece of mail that was returned to the postal center and $0.29 for each piece of mail that was forwarded. However, it did not limit its revenue-deficiency assessment to the actual costs it incurred.

Although only a fraction of Edison's 82.4 million pieces of mail was returned as undeliverable, the postal service decided that the energy company should be liable for the difference between the discounted rates and the regular nondiscounted rates for every piece of mail it sent at the reduced price.

"USPS's position appears to be that even if a mailer complies with 99 percent of the requirements and incurs substantial workshare expenses to bring its mail pieces into compliance, a single form of noncompliance - even accidental, even inconsequential - is sufficient to render a revenue-deficiency assessment for 100 percent of a mailer's discounted rates," Boasberg said.

The postal service also extended the relevant assessment period to 18 months, well past the standard 12-month timeframe for such deficiency assessments. The final figure came out to more than $7.5 million, which represented the difference between the discounted price and the first class rate for the 82.4 million workshare-discounted mail pieces sent by Edison.

To "issue a revenue deficiency for the entirety of plaintiff's discounted-workshare rate for 18 months is so disproportionate that it can hardly qualify as reasoned decision-making," Boasberg said.

The postal service argued that the court cannot remand the agency's final decision back to the service's Pricing & Classification Service Center - where Edison originally appealed the fine - because the center is not allowed to establish an unpublished rate surcharge without review by the Postal Regulatory Commission.

"This is too cute by half: not only does it mischaracterize the appropriate remedy - a reconsideration of the amount of the revenue deficiency - but it also mischaracterizes the PCSC's capacity to grant this relief as the dedicated appeals board that can reassess the revenue-deficiency calculation," Boasberg said.

The judge remanded the case to the PCSC, noting that he is confident that it will be able to "correctly determine a reasoned and reduced sum for the proper revenue-violation deficiency assessment."

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