Court Declares Postal Rate Increase Unlawful

The Postal Regulatory Commission (PRC) failed to follow the Administrative Procedures Act (APA) when it allowed a 10-percent increase in First Class postage. The U.S. Court of Appeals for the District of Columbia (D.C.) Circuit ruled that that decision was unlawful and should be reviewed, siding with plaintiff Douglas Carlson, a postal watchdog.

“Although the five-cent stamp price hike may have gone unnoticed by many, the American Revolution was fomented in part by ordinary people who objected to taxation through stamps,” the court wrote in its ruling. “Carlson’s objections arise in less fraught times. We conclude that this stamp price hike violated the APA because the Commission failed to consider the relevant policies” of the Postal Accountability and Enhancement Act (PAEA), “particularly those raised in the public comments.”

The PRC is on the losing end of this ruling so they either need to appeal – they have 45 days — or revise their opinion, which justified approval of the USPS pricing proposal, said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers (ANM). It could take months for the court case to play out, he said, whether it’s appealed or re-justified.

Time may overtake this because in the next few weeks, Kearney said, as the next Consumer Price Index (CPI) data will be released Oct. 10 and the USPS Board of Governors will meet a week earlier. The USPS Board of Governors is likely to approve a filing for next year’s rate increase, which he expects could be less than 2 percent. It will be the first significant decision by a group of five governors recently appointed and confirmed to the board, he said, adding that any rate increase for 2020 is likely to be less than 2 percent, based on CPI data.

A spokeswoman for the PRC said the commission is reviewing the court’s order and coordinating with the Department of Justice.

At least one large national nonprofit anticipated an additional $1 million in costs as a result of the 10-percent increase in first-class postal rates, Kearney said. “I don’t know what they decided to do, they may have reduced their use of stamps, but that 10-percent increase translated to a $1-million increase,” he said.

The Postal Service proposed the stamp price hike in October as part of a series of adjustments to the category of first-class postage rates. The 10-percent increase required USPS to adjust other classes of First Class postage to stay within the statutory price increase cap of about 2.5 percent, according to the ruling. “The proposal thus decreased the price of some first-class mail products and increase others by a smaller percentage. The stamp price hike, however, was remarkable – the largest absolute increase in the price of stamps since 1863. As a percentage, it was the largest increase since 1995.”

USPS justified the “magnitude of the increase by asserting an interest in keeping the price of stamps ‘at round numbers divisible by five,’” which helps to achieve “simplicity of structure” – one of 14 factors under the Postal Accountability and Enhancement Act (PAEA) of 2007, according to Friday’s ruling.

“When the Postal Service announced this increase last October, from 50 to 55 cents, I thought the justifications that they offered were nonsense,” Carlson told the Federal News Network.

Carlson claimed the increase was “arbitrary and capricious under the APA because the commission failed to consider the objectives and factors listed in the PAEA.” The three-judge panel concluded that the PRC’s consideration of the increase “fell short of the APA’s requirements for reasoned decision-making because the commission “failed to provide an adequate explanation for the stamp price hike, and relatedly, failed to respond to public comments challenging the increase under the PAEA’s statutory factors and objectives.”