New USPS Bill Ties Rate Hikes to Inflation Minus 0.5%, Penalizes Service Failures After One Year

The “USPS SERVES US Act” is a major overhaul of how the Postal Regulatory Commission (PRC) watches over the U.S. Postal Service (USPS). Think of it as the government trying to put the USPS on a stricter diet and giving the referee (the PRC) a much bigger whistle. For busy people, this bill means two things: potentially slower rate increases and a real mechanism to punish the Postal Service when your mail service consistently goes sideways.

The New Rules of the Rate Game

Under current law, the USPS has rules about how much it can raise the price of market-dominant products—think stamps, postcards, and standard letters. Section 2 of this bill changes the annual rate limit formula. Instead of the old cap, the new limit is tied to the Consumer Price Index (CPI)—basically, the official rate of inflation—minus 0.5 percent. This is a big deal for small businesses and anyone who mails a lot of stuff. It means if inflation is 3%, the USPS can only raise rates by 2.5%, offering a slight cushion against rising costs. However, the PRC has the power to override that 0.5% reduction if they explain why, giving them significant discretion over the final rate cap.

Section 5 also adds a simple but crucial limit: the PRC can only adjust rates once every 12 months. No more multiple small hikes throughout the year. This provides much-needed predictability for budgeting, whether you’re a small e-commerce shop or just trying to figure out the cost of holiday cards.

Consequences for Consistent Service Failures

This is where the bill gets teeth. Section 3 introduces mandatory financial sanctions for the USPS if it fails to meet its service targets for a full year. If the PRC finds a “covered failure”—meaning the service target was missed for 12 months, it wasn't caused by a natural disaster, and the USPS has no believable fix—the PRC can lower the maximum amount the USPS is allowed to raise prices for the affected mail product. For example, if the target for First-Class Mail delivery is missed for a year, the PRC could reduce the price increase cap for First-Class Mail until performance is fixed.

This creates a direct, financial incentive for the USPS to actually deliver on its service promises. For the average person, this means that if your mail is consistently delayed in your area, the regulatory body finally has a powerful tool—hitting the USPS’s bottom line—to force improvements.

Your New Advocate at the Post Office

Section 9 creates an Office of the Customer Advocate within the PRC. This new office is specifically tasked with representing the interests of the general public and customers during all regulatory proceedings. Think of it as the public finally getting a dedicated, full-time lawyer in the room when the USPS and the PRC are discussing rates and service changes. This advocate has the power to file complaints and petitions, and critically, the PRC can’t retaliate against any employee in the Office for how they represent the public interest. This is a huge win for transparency and consumer voice.

The Fine Print on Accountability

While the bill focuses on accountability, it also tightens up regulatory procedures. Section 4 clarifies that the PRC can intervene if the USPS makes a significant service change without formally proposing it—a move designed to prevent the USPS from quietly changing how things work. However, the Board of Governors of the USPS can unanimously reject the PRC’s findings on these unproposed changes, essentially nullifying the PRC’s oversight in specific cases. This creates a potential loophole where the USPS leadership could push through controversial changes if they stick together.

Furthermore, Section 11 introduces severe penalties if the USPS is found to have charged an unlawful rate. If a rate is deemed illegal, the PRC must reduce the USPS’s ability to raise prices in the future until the amount of “foregone revenue”—the money the USPS overcharged—is recouped. This is a serious financial constraint that could limit the USPS’s operational flexibility for years if a major rate is found to be unlawful. It also adds a separate penalty if the USPS unreasonably delays a complaint proceeding, further encouraging swift action and transparency.