Postal Service Scores Victory After Supreme Court Declines to Hear Challenge From UPS

The Supreme Court this week declined to hear a case that would have challenged the U.S. Postal Service’s pricing mechanism, scoring a major win for the mailing agency and its largest customers.

UPS, which is both a Postal Service customer and competitor, brought the challenge to the highest court after losing at the appellate level. The company argued the Postal Regulatory Commission erred in its calculation of costs attributed to “competitive products,” giving the Postal Service an unfair advantage as it leans on its statutory monopoly to subsidize offerings such as shipping and packages.

The U.S. Court of Appeals for the D.C. Circuit rejected UPS’s argument, citing the Chevron precedent that requires courts to defer to regulatory agencies to interpret ambiguous laws. UPS urged the Supreme Court to use the case to reassess that precedent, noting that several justices have voiced concerns over it. The company called the case the “ideal vehicle” to reevaluate Chevron, though ultimately the Supreme Court opted not to weigh in.

Citing the task force President Trump created by executive order, UPS argued that the Postal Service pricing system unfairly disregards the advantages the agency maintains from its “market dominant products,” such as its protected access to an individual's mailbox. The company specifically objected to the assumptions postal regulators make when attributing costs to various sections of USPS’s business. By law, the Postal Service must cover all of its “attributable costs” for its competitive products exclusively from revenue those offerings generate.

“Postal pricing has departed from Congress’s requirement that the Postal Service compete on a level playing field with private companies for package delivery,” UPS wrote in a petition for Supreme Court intervention.

Large-scale mailers praised the Supreme Court’s decision to bypass the appeal, calling it a win for businesses and consumers alike.

“We are heartened that expert independent agencies, the D.C. Circuit and now the Supreme Court, have rejected arguments by private competitors that would have forced the Postal Service to raise prices on American consumers and businesses that rely on the Postal Service to provide affordable package delivery services,” said John McHugh, chairman of the Package Coalition, a group of major shippers such as Amazon.

Trump has joined USPS competitors in taking issue with the agency’s pricing structure, specifically suggesting the agency has given unfair advantages to Amazon. The Postal Service has denied those charges and the PRC reviews pricing agreements such as Amazon’s to ensure compliance with cost covering mandates.

Trump’s task force suggested the Postal Service divide its offerings into essential and non-essential products, with more pricing flexibility for the latter category. The group did not spell out in detail what would be considered non-essential. Lawmakers have so far shown little interest in adopting the task force’s recommendations.