Jenny Kane / AP

Significant USPS Rate Hike Will Move Forward This Month After Court Rejects Request for Pause

Mailers had sought to block the first-of-its-kind rate increase from taking effect while suing over new price-setting authority.

The U.S. Postal Service will move forward with its stark price hikes on Aug. 29 following a federal court opting not to block the increase from going into effect while a lawsuit plays out. 

USPS will raise rates for regular, First-Class mail by 6.8% and for package services by 8.8%. A standard stamp will go from $0.55 to $0.58. Large-scale mail users are suing the Postal Service and the Postal Regulatory Commission, arguing the authority postal management used to implement the rate increase is unlawful. The groups asked the U.S. Court of Appeals for the D.C. Circuit to issue a stay to prevent the hikes from taking effect next week while the underlying case is resolved, but the court on Tuesday declined to do so. 

Dave Partenheimer, a postal spokesman, confirmed the mailing agency will implement the new prices as planned. 

"The new pricing will enable us to grow revenue to help achieve financial sustainability to fulfill our universal service mission, as outlined in our Delivering for America plan," Partenheimer said. "Even with the rate increases, Postal Service prices will remain among the world’s most affordable."

The rate hikes were the first USPS implemented under a new authority PRC granted it last year. The new system ties price caps to what the regulatory commission identified as USPS’ two biggest cost drivers: fewer pieces of mail going to more addresses and mandatory payments the agency must make toward benefits for future retirees. Postal management previously could only raise rates in line with inflation. 

The mailers argued before the court that PRC circumvented federal statute in granting USPS the broad rate-setting discretion. They also said in a hearing before the regulatory commission that the increases would hurt their organizations and drive users out of the mailing system. The commission disagreed, predicting in its July approval of the new rates only positive effects.

“It is the commission’s expectation that price increases like the ones proposed in this proceeding will enhance the Postal Service’s ability to make investments that increase efficiency and reduce costs, while also narrowing the formidable gap between costs and revenues, thus motivating the Postal Service to take further steps to reduce costs and increase efficiency,” it wrote.

Ultimately, as it had already granted the authority, PRC’s review amounted to simply checking USPS’ math to ensure its proposals stayed within the parameters of its rate-setting authority.

The mailers had previously asked for a stay on potential rate increases before management had even proposed any, but the court said the request was premature and denied it. The groups tried their luck again, noting the rate hikes were no longer theoretical. The mailers said they would suffer irreparable harm if the rates go into effect, as they could not recover the revenue they would lose in the interim even if the court ultimately sides in their favor. While USPS argued it needed the revenue from the higher rates immediately, the mailers said the agency had sufficient liquidity to at least sustain a temporary pause while the case plays out. The court, however, remained unconvinced. 

Postmaster General Louis DeJoy has called higher rate increases a key part of his plan to turn USPS’ finances around within 10 years. DeJoy previously promised to use his authority to raise rates above inflation "judiciously," but predicted USPS would generate between $35 billion and $52 billion over the next decade by raising prices. The Postal Service announced earlier this month it would raise prices between $0.25 and $5.00 per package during the holiday season, depending on the product and its weight. The higher prices are slated to be in effect from Oct. 3 through Dec. 26 and would affect both individuals and commercial entities using the mail system.

DeJoy is simultaneously moving forward with his plan to slow down delivery for some mail, saying USPS can no longer meet its previous windows. PRC in July did not flat out reject the proposal, but suggested it was not fully thought out and that its success remained far from guaranteed. The slower mail targets are set to go into effect Oct. 1.