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On May 31, the Postal Regulatory Commission (PRC) approved the USPS market-dominant rate increases proposed by the Postal Service on April 10. Periodicals rates will increase 8.122% while marketing mail will increase 5.378%. In addition, the PRC noted that there were numerous errors in the Postal Service’s initial filing, including errors in the workpapers for all five mail classes. The PRC directed the Postal Service to investigate its initial filing procedures and to file a report with the results of its investigation and its plan to correct the issues identified in this proceeding in future rate adjustment proceedings by July 31.

To further address member concerns on rate increases and service delivery, the News/Media Alliance submitted joint comments to the US House Subcommittee on Government Operations following a hearing May 17 – Tracking the Postal Service: An Update on the Delivering for America (DFA) Plan. The Alliance is part of the Coalition for a 21st Century Postal Service, which stated the relentless, twice-yearly postage rates increases are endangering the Postal Service’s mail business and is destructive to businesses. The hearing was a solid first step toward ongoing oversight of the DFA plan; however, The Alliance will continue to advocate for additional hearings and oversight. The Alliance is also working on recommendations to Congress on ways to strengthen the PRC’s oversight of USPS rates and service and to provide greater accountability for USPS actions.

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• Operating revenue of $78.5 billion, up $1.5 billion from the prior fiscal year
• Adjusted loss increased by $2.0 billion
• One-time, non-cash benefit of $57.0 billion from the Postal Service Reform Act

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The Postal Regulatory Commission (PRC) has favorably reviewed new competitive and market dominant price increases that will take effect July 10, 2022. For Periodicals, the overall increase is 8.540 percent, while Marketing Mail sees an overall increase of 6.5 percent. See the final orders on the price adjustments and related mail classification changes, as well as the price change tables. Meanwhile, the PRC has also invited stakeholder input regarding a study on USPS rate increases. The Alliance continues to work with the PRC, USPS and Congressional leaders on solutions that will help protect news publishers and communities’ access to high-quality journalism.

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On September 15, the United States Postal Service (USPS) filed “Schedule and Predictable Rate Changes.” The schedule lays out planned rate increases over the next three years but is not binding on the USPS. The next increase is scheduled for July 10, 2022. The case challenging the increase is still ongoing in the DC Circuit. Read more.

Related: Postal Rates to Increase August 29

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Court Denies Motion to Delay Postage Price Increase

On August 24, the DC Circuit denied a petition by the News Media Alliance, the National Newspaper Association, and others to delay the increase in postage rates. The court provided no explanation for its decision. The rate increase on newspapers is nearly seven times the rate of inflation, delivering a serious blow to already struggling newspapers. Smaller local and community newspapers stand to suffer the most. Congress also has the ability to intervene, and two representatives have drafted a letter encouraging the Postmaster General to delay the rate increase. The lawsuit will continue forward, with oral arguments scheduled for September 13th and a decision expected before the end of the year.

Related: While Its Finances Improve, USPS Seeks to Squeeze More Revenue Out of Mailers

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It has been standard practice for the U.S. Postal Service (USPS) to announce bad news right before a holiday, and this Memorial Day weekend was no exception. On May 28, USPS announced proposed rate increases for First Class, Periodicals and Marketing Mail that, in some cases, are seven times the rate of inflation:

– Newspapers that mail their editorial product will see the biggest increase, with the overall average increase for Outside County Periodicals coming in at 8.832 percent and Within County Periodicals at 8.311 percent.

– In Marketing Mail, commercial high-density/saturation mail, which is typically how newspapers’ Total Market Coverage (TMC) products travel through the postal system, the overall average increase is 4.961 percent.

– With Periodicals and Marketing Mail, the rate design proposed by USPS appears to favor destination entry. For example, the rate for a six-ounce saturation TMC that is entered at a Section Center Facility, the per-piece rate increases by 5.12 percent.  However, the same piece entered at the Destination Delivery Unit – the local post office – the increase is only 1.92 percent.

– With Outside County Periodicals, which are used by newspapers and regional and national magazines, the rate increases mostly come at the piece rate and appear intended to encourage higher density and destination entry. The new rates continue to encourage mail preparation in trays and especially pallets, which are more efficient to handle.

– Here is a chart of the newly proposed rates that will be of interest to newspaper publishers.

With this rate announcement, USPS is trying to implement a mid-year rate increase after already increasing rates by 1.9 percent, on average, earlier this year. That rate increase, which was done on an annual cycle, fell within the congressionally mandated rate cap that is tied to the Consumer Price Index (CPI), which has averaged 2 percent per year over the last 14 years. That rate cap had kept postage rates reasonable and predictable, incentivizing mailers to stay in the nation’s postal system. However, last November, the Postal Regulatory Commission (PRC) issued an order that allowed USPS to set rates well above the CPI for the purpose of shoring up its financial position and addressing liabilities. Under this new rate authority, USPS would be able to increase rates well above inflation over the next five years.

The Alliance and other mailers are appealing to Congress and the USPS Board of Governors to step in, as these rate increases are unsustainable for mailers and will have the opposite effect of what they intended of simply driving mail and revenue out of the postal system. The Alliance and other mailers are also currently litigating a case that challenges the PRC’s order, arguing that current law does not give the PRC the authority to eliminate the cap, and to do so is a decision for Congress to make, not the unelected regulator. The petitioners also argue that the PRC acted arbitrarily by basing its decision on USPS’s financial condition in December 2017, rather than its condition today.

USPS’s financial condition has actually improved significantly during the pandemic, with the agency realizing better than expected revenue and net income as shown in a recent filing with the PRC. This is most likely due to a recent increase in mail volume as businesses re-open and USPS’s package business has grown during the pandemic. USPS also received a $10 billion grant from Congress at the end of last year, and proposed legislation in the House and Senate would eliminate USPS’s liabilities, saving it roughly $57 billion in liabilities over the next decade. As the decision in the case challenging PRC’s order will come long after these new rates would be implemented, the Alliance is encouraging policymakers to amend legislation and require the PRC to revisit its decision with a time-limited review examining the effects of the pandemic. A new evaluation using more recent data would provide a more accurate picture of USPS’s finances, as well as assess business mailers’ intentions to remain customers of the Postal Service or seek alternatives.

The proposed rate increases have been filed with the PRC and a public comment period will occur over the next 30 days. If approved in July, the new rates will go into effect on August 29, 2021.

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As the U.S. Postal Service (USPS) financial crisis and the debate over removing the inflationary price cap on postal rates intensifies, the subject of postal revenue and costs is headed to Congress.

Congress is working to improve the financial condition of the Postal Service, which mailers hope will ease pressure on USPS and reduce the need to squeeze revenues from monopoly mailers, who may seek other alternatives if their postage costs go up.

Chairwoman of the House Committee on Oversight and Reform, Rep. Carolyn Maloney (D-NY), and Ranking Member, Rep. James Comer (R-KY), recently introduced the Postal Service Reform Act of 2021 in the House (H.R. 3076), which would bolster the USPS financial position by integrating postal retiree health benefits into Medicare and repealing a congressional mandate for USPS to pre-fund its retiree healthcare costs. These provisions would save the Postal Service an estimated $57 billion in liabilities over the next decade.

The legislation also requires USPS to maintain an integrated delivery system for packages and monopoly mail of at least six days a week and would help rural newspapers by allowing within-county newspapers to increase their distribution of sample copies—from 10 percent under current law to 50 percent. This will allow rural newspapers to provide samples at lower rates to readers for the purpose of attracting new or returning subscribers.

The bipartisan bill was adopted by the Committee on Oversight and Reform earlier this month with no amendments. A bipartisan group of 20 Senators, led by the Chairman and Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, Senator Gary Peters (D-MI), and Senator Rob Portman (R-OH), respectively, have now introduced a nearly identical bill in the Senate (S. 1720).

However, the legislation in the House and Senate will not prevent the crushing price increases that may soon slam mailers. As we have mentioned in earlier posts, the Postal Service’s ability to raise postal rates – outside of the annual increases usually implemented in January – became available on November 30 when the Postal Regulatory Commission (PRC) overturned a Congressionally-mandated inflationary price cap for monopoly mail (First Class, Periodicals and Marketing Mail). The change could lead to increased rates as early as September and higher costs for publishers, in the range of six to nine percent. This would be on top of rate increases that were implemented at the beginning of the year.

The Alliance and other mailers are encouraging members of Congress to add an amendment to legislation that would require the Postal Regulatory Commission (PRC) to conduct another review of the rate-setting system with more recent data (including the effects of the pandemic) that would provide a more accurate picture of the Postal Service’s finances. This review would demonstrate that USPS is in a stronger financial and operational position given increased postal revenue in packages and a $10 billion appropriation granted by the agency. This could lead the PRC to revise the parameters used for the new rate-setting system, and result in a lower rate structure.

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