September 16, 2019

On Friday the 13th of September, before the rise of the full moon, the U.S. Court of Appeals for the D.C. Circuit ruled that the decision by the Postal Regulatory Commission (PRC) to allow a record 10 percent increase in single-piece First Class stamp postage was unlawful and must be reviewed. (We shared it on our social media at 2 pm Friday.) The court ruled in favor of watchdog Douglas Carlson that the PRC failed to follow the Administrative Procedure Act (APA):

We agree with Carlson that the stamp price hike did not meet the APA’s requirements for reasoned decisionmaking. The Commission failed to provide an adequate explanation of the increase and, relatedly, failed to respond to public comments challenging the increase under relevant statutory factors and objectives included in the Commission’s organic statute, the Postal Accountability and Enhancement Act (PAEA). Accordingly, we grant the petition for review and vacate the part of Order 4875 addressing rate adjustments for the category of first-class mail. Because the category of first class rates is severable, we leave the remainder of the Order intact.

Important to Nonprofits

This rate is very important to many nonprofits that mail out requests for donations and membership, and thank you and invitation letters with stamps.  And many more include response envelopes with either stamps affixed or Business Reply Mail indicia.  The Alliance expressed our concerns about the impact on nonprofits shortly after it was proposed by USPS.  Recall that we also were defending Marketing Mail from another misguided USPS proposal to outlaw virtually all physical content such as premiums.

No Rollback Soon

Nonprofit mailers, however, should not expect any near-term rollback of the 55 cents rate.

Do not expect a rollback because the PRC, represented by the Justice Department, has up to 45 days to appeal, and likely will.  And a rollback in the single-piece rate would prompt tortured changes in the other categories of First Class, such as commercial and additional ounces, akin to what the Postal Service did in the original proposal.  (Which, by the way, seemed to spring from nowhere, with no prior discussion with customers.)

2020 Rate Increases Coming Soon

In the meantime, the new slate of five USPS Governors will be voting on rate increases for 2020 before October 10.  We expect average increases for each class of mail a little below 2 percent.  And it is likely USPS will have no change in their 55 cent single-piece First Class rate for 2020.   To do so without a direct order would call into question their already flimsy rationale that customers prefer “round” 5 cent denomination increments.  Unless, of course, they proposed 60 cents, which seems somewhat irresponsible.

Importance of the Factors, Objectives, and Requirements

Aside from an unlikely rollback, at a minimum the decision reinforces that the USPS and PRC have to seriously take into account, in all rate orders and proposals, the factors, objectives, and requirements in postal law.  And it also reminds them of the importance of seriously considering all comments they receive in the public comment process.

We will keep you posted as this plays out.