Contact: Robert E. McLean
703-418-0390
bmclean@mailers.org
www.mailers.org

Postal Facts: USPS Background

USPS Defined

Congress created the United States Postal Service when it approved the Postal Reorganization Act in 1971 (implemented in 1972). It created the USPS as an independent establishment of the executive branch of the U.S. government. As detailed in Title 39, United States Code, the USPS is directed by an 11-member Board of Governors. The Board directs and controls postal expenditures and reviews USPS practices and policies. Nine of the governors are presidential appointees; they appoint the other two board members, the postmaster general and deputy postmaster general.

Postal Rates

In 2006 Congress approved the Postal Accountability and Enhancement Act which dramatically changed the way postage rate increases will be implemented. The legislation prohibits the average rate for a product from rising higher than the annual increase in the Consumer Price Index except under extraordinary circumstances. This change eliminated lengthy and expensive litigation that preceeded a nine-month process, saving mailers millions of dollars.

The bill also redesignated the Postal Rate Commission as the Postal Regulatory Commission (PRC) and gives it broader regulatory and oversight authority, including subpoena power.

Recent Rate History

Because of the 2006 postal reform law, postage rates will now be adjusted every May, subject to a new rate-setting process in the law. With some exceptions, rate increases will be no more than the rate of inflation for the preceeding year. Instead of the nine-month litigious process that was followed from 1971 to 2007, the USPS may increase rates for most products in a simplified process that will save mailers millions of dollars.

Following are some of the notable provisions int he 2006 law relating to postage rate increases:

• There are different rules for market-dominant and competitive products. The PRC may assign services to either the competitive or marketdominant category.
• The law requires the PRC to create new rules for market-dominant products that will tie annual postage rate hikes to increases in the Consumer Price Index (CPI).
• It allows the USPS Board of Governors to set competitive product rates according to regulations drafted by the PRC.
• The USPS may seek a waiver of the CPI limit from the PRC in extraordinary or exceptional circumstances in order to maintain quality services.
• It allows the USPS to save and use later any unused rate-hiking authority for up to five years.

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