Competing appeals of Postal Service’s upcoming rate hike

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Three days before the U.S. Postal Service raises the price of a first-class letter and most other mail by three cents to 49 cents, the agency and the mail industry filed competing appeals of the rate increase in federal court Thursday.

Both sides were left unhappy by the Postal Regulatory Commission’s Dec. 24 ruling, which allows the Postal Service to raise stamp prices, but only temporarily. The mail agency is asking the U.S. Court of Appeals in the District to make the increase permanent and prevent it from being phased out in two years. That’s about how long regulators said it would take for the agency to recover its losses from the recent recession, the justification postal officials used when requesting an emergency increase, the largest in 11 years.

The mailing industry, which depends on the Postal Service to cap rates to keep profits healthy, is asking the same court to overturn the ruling, saying the agency’s request for a hike based on recessionary losses is masking other structural problems.

“We hope the legal system will see through the Postal Service’s fuzzy math,” Mary G. Berner, president of the Association of Magazine Media, said in a statement Thursday. The association is part of a broad coalition of postal mailers appealing the commission’s ruling, from direct marketers to newspapers.

(David Goldman/AP)
(David Goldman/AP)

The appeals are unlikely to stop the rate increase from taking effect on Monday when the current first-class stamp price of 46 cents will rise to 49 cents, a 4.3 percent jump regulators allowed on top of the customary 1.7 percent rate adjustment for inflation. Postal officials said they are moving forward with the higher price, relying on the popular “Forever” stamp for the transition.

The Postal Service petitioned regulators for an emergency rate hike last year, claiming it needed $1.4 billion in extra revenue a year to compensate for business losses the agency suffered during the economic downturn between 2008 and 2011.

But the commission rejected a permanent increase, saying that a $2.8 billion infusion from the higher stamp rate over two years should help recoup recession-related losses. Regulators said that allowing the higher rates to become permanent would be in effect asking customers to offset structural losses caused by Americans’ growing use of electronic communications and commercial package delivery companies.

The Postal Service filed a brief petition with the court Thursday challenging the commission’s ruling. The document says the agency is appealing but gives no details. In a statement on Dec. 24, the Postal Service said it was “disappointed in the [commission’s] decision to limit the duration of a modest exigent rate increase.”

The mail-dependent publishing industries had lobbied against an increase, saying that it would depress mail volume and burden consumers.

 “The Postal Service has been losing mail volume to the Internet for years, even with very small annual rate increases,” Art Sackler, executive director of the National Postal Policy Council, another group representing mailers, said in a statement. “To think that as large an increase as this one will not seriously accelerate the decline in mail volume is a miscalculation.

In addition to first-class mail, the higher rates will apply to magazines, newspapers, advertising mail and bills — which together account for most of the 158 billion pieces of mail delivered every year.

Ann Fisher, a spokeswoman for the Postal Regulatory Commission, said in an e-mail that “Given the nature of the case, an appeal, or two, was expected.”

Lisa Rein covers the federal workforce and issues that concern the management of government.
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