Decision sparks confusion as USPS says it is weighing its legal options.
A federal court dealt a major blow to the U.S. Postal Service on Friday, ruling that the mailing agency’s five-cent price increase for stamps that went into effect earlier this year is illegal.
The U.S. Court of Appeals for the D.C. Circuit sided with Doug Carlson, a private citizen, who filed his petition against the Postal Regulatory Commission, an oversight body that approves all proposed USPS rate hikes. The court said PRC failed to consider all factors related to the increase, thereby violating the Administrative Procedures Act.
The immediate fallout of the decision was not immediately clear, as the Postal Service said it is “considering our legal options.” By the court’s own admission, an “invalid rate increase can result in overpayment to the Postal Service without any means of recovery.” USPS was forced to quickly slash the price of stamps as recently as 2016, when PRC and an appeals court ruled the mailing agency had to rollback the emergency rate increase it imposed in response to the recession.
The five-cent increase—a 10% jump—was the largest-ever hike for a stamp and the largest by percentage since 1995. The court, in an opinion written by Circuit Judge Neomi Rao, a Trump appointee who formerly worked in the White House as director of the Office of Information and Regulatory Affairs, called the hike “remarkable” and lacking in justification.
“The commission failed to provide an adequate explanation for the stamp price hike, and, relatedly, failed to respond to public comments challenging the stamp price hike under the [2006 Postal Accountability and Enhancement Act]’s statutory factors and objectives,” Rao wrote.
Instead, Rao said on behalf of the three-judge panel, PRC simply crunched the numbers and determined the Postal Service’s proposal complied with its statutory caps for price increases. While USPS cannot raise its rates by more than inflation, the agency adjusted the prices of other products to enable a larger increase for stamps.
The court said the commission failed to address public concerns regarding the Postal Service’s argument it had to use a round number divisible by five for simplicity's sake, the effect of the increase on the general public and the possibility that the increase would lead to a further reduction in mail usage. PRC argued it had to rush its review, but the court said there is no law requiring a speedy decision by the commission.
“Congress directed the commission to serve as more than just a rubber stamp of the Postal Service’s proposed rate increases,” the court said.
Gail Adams, a PRC spokeswoman, said the commission “is reviewing the court’s order and coordinating with the Department of Justice.”
Carlson, who brought the challenge to the D.C. Circuit, said he was pleased with the decision and confident he would prevail. He is a private citizen with a law degree who does not practice law professionally. He has engaged with the Postal Service on behalf of the public as a hobby since the mid-1990s. After reading postal management’s justification for its recent price increase, he knew he would challenge it.
“I said, ‘that’s complete nonsense, that’s a big increase and it’s unfair to the general public,” Carlson said.
What happens now remains ambiguous, he said, noting PRC could simply provide additional analysis to support its approval of the price increase rather than ordering a rate reduction.
“It’s a lot of confusion,” he said.
A USPS spokesman said the current cost of a stamp is still 55 cents.
Stephen Kearney, executive director of the Alliance of Nonprofit Mailers, applauded the ruling. Virtually all organizations representing large-scale mailers spoke out against the increase.
“Single-piece first-class postage is vitally important to much nonprofit fundraising and membership,” Kearney said. “We welcome the court’s ruling and look forward to hearing how it will be implemented.”
In her ruling, Rao invoked the earliest days of U.S. history.
“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,” she wrote. While Carlson raised his concerns “in less fraught times,” she added, the court nonetheless ordered the price hike vacated.
This story was updated with additional information from the Postal Service.