House Circulates Postal Reform Draft Bill

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Four members of the House of Representatives released a draft bill yesterday that would overhaul the U.S. Postal Service. The introduction of the bill and its markup are expected to happen next week.

The objective of the "Postal Accountability and Enhancement Act of 2004" is to position the USPS to operate in a more business-like manner. In general, the legislation addresses seven issues:

· Modern rate regulation: Shifting the basis of the Postal Rate Commission to a system designed to ensure that rate increases generally don't exceed the annual change in the Consumer Price Index. This applies only to market-dominant products such as First-Class mail, Periodicals and Standard mail.

· Combining market disciplines with regulation: Combining market mechanisms with PRC regulation to govern the rates of competitive products. The USPS would get additional pricing freedom but would lose favored legal treatment for such products.

· Limitations on postal monopoly and non-postal products: Requiring the USPS to offer only postal services and define exactly what constitutes "postal services." The bill also revises the authority of the postal service to regulate competitors.

· Reform of international mail regulation: Clarifying the authority of the State Department to set international policy, applying customs laws equally to postal and private shipments, and giving the USPS the authority to contract with airlines for transport of international mail.

· Strengthening the PRC: Giving the PRC "teeth" by granting it subpoena power and a broader scope for regulation and oversight. The PRC would be renamed the Postal Regulatory Commission.

· Establish a basis for future reforms: Mandating several studies, including a comprehensive assessment of the scope and standards for universal service.

· Miscellaneous reforms: Including returning the responsibility for the military service cost of postal retirees to the Treasury Department while also requiring the USPS to significantly fund its enormous liability for retiree health benefits.

The draft was circulated by House Government Reform Committee chairman Tom Davis, R-VA; ranking minority member Henry Waxman, D-CA; committee postal panel chairman John McHugh, R-NY; and ranking minority panel member Danny Davis, D-IL.

The Direct Marketing Association voiced initial support for the 126-page draft yesterday, though it still is reviewing the specifics.

At first glance, the bill resembles H.R. 4790, a House postal reform bill that died in committee in 2002, said Jerry Cerasale, senior vice president of government affairs at the DMA. Unlike that bill, "there seems to be some momentum within Congress around postal reform this time. [However,] getting something through is hard. A lot of speed bumps are still ahead."

Senate Governmental Affairs Committee chairwoman Susan Collins, R-ME, and Sen. Thomas Carper, D-DE, also are expected to introduce postal legislation this month.


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