Supreme Court rejects challenge to higher USPS rates, but regulator review ongoing

A challenge to the Postal Service’s authority to set market-dominant mail prices above the rate of inflation won’t get a hearing from the Supreme Court.

The Supreme Court on Monday denied a petition from the National Postal Policy Council to review a federal appeal’s court ruling on the matter.

A three-judge panel with the U.S. Court of Appeals for the D.C. Circuit last November found the Postal Regulatory Commission (PRC) struck a careful balance when it allowed USPS to set mail rates higher than the pace of inflation.

Steve Kearney, executive director of the Alliance of Nonprofit Mailers, a plaintiff in the lawsuit, said it is “disappointing that the unnecessary and harmful above-inflation rate increase authority will continue.”

The PRC, however, is reexamining its decision to grant greater pricing flexibility to USPS. As part of this review, the commission is gathering public feedback for a congressionally mandated study on postal rates, and will accept comments through July 31.

Congress, in the omnibus spending bill for fiscal 2022, said the PRC’s rate-setting changes didn’t account for the impact of the COVID-19 pandemic, including higher package revenue and $10 billion in emergency COVID funds that Congress gave USPS.

The spending bill directs the PRC to study these factors and report to lawmakers within 270 days on how these factors should impact the rate increases proposed by USPS.

The House version of the fiscal 2023 spending bill would also press the commission to study the impact of planned postage increases.

The current version of the bill, passed by the House Appropriations Committee last week, directs the PRC to specifically consider the impact of higher package revenue, emergency COVID funding, and the Postal Service Reform Act’s impact on USPS finances.

The FY 2023 spending bill, which now heads to the House floor for a vote, also outlines a wide array of requirements for USPS.

The bill, in its current form, directs USPS to work with the PRC on steps it can take to “minimize or reverse any further degradations to service standards for market-dominant products,” such as first-class mail.

USPS last October implemented a new service standard that would slow 40% of first-class mail by a day or two, especially for mail that travels the furthest for delivery.

This early version of the FY 2023 spending bill directs USPS to provide a comparison of delivery service performance data from before and after the new service standard went into effect.

The House version of the spending bill also prohibits USPS from using appropriated funds to consolidate or close small rural and other small post offices.

“The Postal Service shall take into consideration the importance of providing consistent and on-time delivery to all Americans, including those in rural and mountainous areas,” the spending bill states.

The bill also directs USPS to review the impact that closing processing centers has had on its level of mail service.

The committee-mandated study would also require USPS to consider the feasibility of reopening closed facilities. USPS would submit its report within 180 days of the spending bill passing.

“In recent decades, USPS has closed hundreds of processing facilities. The committee is concerned that these closures have contributed to reduced service,” the spending bill states.

Postmaster General Louis DeJoy recently unveiled plans to realign its network of processing facilities and improve the route structure its carriers rely on to deliver to 161 million addresses every day.

The spending bill in its current form doesn’t give direct funding to USPS for electric vehicles, but does give the General Services Administration $100 million to fund electric vehicles governmentwide, including at USPS.

The committee expects USPS to consult with GSA on the effective use of that funding to increase its investment in electric vehicles.

The committee requests that USPS track the fuel consumption and emissions portfolio of all vehicles managed or contracted by USPS, as well as its plan for reducing fleet fuel costs and emissions in the future.

The spending bill would give USPS $6 million to carry out postal banking pilot programs in at least five rural ZIP codes.

The bill would also require USPS to modernize its current postal banking services, “including surcharge-free automated teller machines, wire transfers, check cashing, and bill payment to the fullest extent permitted under current statutory authority.”

The committee directs USPS, in collaboration with the USPS inspector general’s office to provide an update on its postal banking pilot within a year of the bill being passed into law.

The PRC, meanwhile is scrutinizing the agency’s rollout of a postal banking pilot, and is looking to determine whether USPS has the legal authority to administer these financial services.

The commission, in a filing last month, said it seeks information to determine whether the USPS pilot launched last exceeded its legal authority.

“The commission seeks the information to determine whether the Pilot Program has changed the nature of the competitive product at issue … to the degree that the gift cards price category (or an undefined sub-component) may be categorized as a non-postal product,” the PRC wrote.

The pilot allows customers to exchange payroll and business checks for gift cards.

“A finding that the price category, product, or subcomponent is a non-postal product that would require its termination,” the commission states.

In fiscal 2014, the commission allow USPS to sell gift cards as a product that was “likely to be mailed, similar to greeting cards and stationery,” and was involved in the sale of other postal retail products, including greeting cards.

USPS at the time told the commission that it did not intend to use the filing “as a step into offering banking services, and if any USPS proposal should ever offer banking services, “such proposals would be done in a separate filing.”

USPS said it based its pilot based in part on a 2019 Federal Deposit Insurance Corporation on household use of banking and financial services, as well as USPS inspector general reports on potential postal financial services.

The Postal Service told the commission it has for many years cashed or redeemed salary checks or money orders in a limited number of circumstances.

USPS, the commission notes, has issued money orders since the Civil War, and for the past 50 years, USPS has cashed USPS-issued salary checks and money orders at no charge.

The Postal Service also noted that in the last 10 years, and “in cooperation with the United States Treasury, the Postal Service has cashed Treasury checks for a nominal fee.”

USPS told the commission that “no new products or services are involved,” but the commission notes that the pilot is targeted specifically at a market looking for financial services.

The commission notes that none of the transactions in the pilot have led to the sale of other postal products.

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