FactSheet 1

Contact: Robert E. McLean

703-418-0390

bmclean@mailers.org

How the U.S. Postal Service Sets Postage Rates

The current process for setting postage rates was established in 1971 when Congress approved the Postal Reorganization Act (Title 39 of the U.S. Code). The Act removed price-setting from Congress’ jurisdiction, and divided it between two Presidentially-appointed bodies: the Postal Service Board of Governors and the Postal Rate Commission (PRC).

There are nine Governors who are appointed by the President and confirmed by the Senate for nine-year terms. They select a Postmaster General and a Deputy Postmaster General who become Board members.

There are five Postal Rate Commissioners who are appointed by the President and confirmed by the Senate for six-year terms. The President also designates the PRC Chairman.

There are three major steps in the rate-setting process. The first occurs when the Postal Service Board of Governors determines that a rate increase is necessary. The USPS files a rate case with the PRC. The rate filing is a complex document that runs several hundred pages. Rates are set depending on factors such as the weight, quantity, and destination of material mailed and whether the mailer is a for-profit or nonprofit organization.

During the second step in the process, the PRC may take up to 10 months to hold hearings on the rate case, review testimony, and make a “recommended decision” to the Board of Governors. The PRC may accept the Postal Service’s proposed rates without change or may alter any single proposed rate. The current rate case includes hundreds of different postage rates. The PRC sends its “recommended decision” on the proposed rates to the Governors.

During the third and final step in the process, the Board of Governors (with the advice of senior postal management) reviews the PRC “recommended decision.” The Governors may approve, reject, or modify that recommendation and set the effective date for the new rates. The Governors’ decision may be appealed to a federal court of appeals.

The Postal Service filed a rate case on January 10, 2000. The Postal Rate Commission's issued its recommended decision in the case on November 13, 2000. Those rates were implemented on January 7, 2001. That was the first rate increase since January 10, 1999.

Revised November 2000