A federal appeals court on Friday upheld the major rate hikes imposed in August by the U.S. Postal Service, saying the Postal Regulatory Commission’s order underlying the increases was neither arbitrary and capricious, nor did it exceed the Commission’s statutory authority.
The decision, by the U.S. Court of Appeals for the District of Columbia Circuit, preserves a 6.8% increase for first-class mail and an 8.8% increase for package services — hikes of unprecedented size in recent years. The increases came after the PRC late last year finished an overhaul of the existing rate-setting system, which it had deemed inadequate. The new rate system ties price caps to what the PRC identified as the USPS’ most significant cost drivers: fewer pieces of mail going to more addresses and benefits payments the agency is required to make for future retirees.
The case in the appeals court was brought by the National Postal Policy Council, the trade association for large business users of letter mail, primarily first class. Members of the NPPC are a who’s who in the U.S. economy, particularly banking and insurance, including Netflix, State Farm, Wells Fargo, Sprint, American Express, Citibank, Canon, and Fidelity Investments.
The News Media Alliance, which represents most of the nation’s large news organizations, on Monday issued a statement condemning the court decision.
“The decision has serious consequences for news publishers, with the rate of increase on newspapers being nearly seven times the rate of inflation,” the statement said. “This particularly harms small local and community newspapers, far too many of which are already struggling to survive. The Alliance will continue to work with Congressional leaders to find a solution that will help protect American news publishers and our communities’ access to high-quality journalism.”
The decision, and the response from large mailers, is indicative of the vice grip print-media publishers are in. Mailing and other costs are increasing, even as revenue declines precipitously, driven by declining consumer interest and the shift to digital by readers and advertisers.