Postal Reform Bill Introduced in Senate

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Senate Governmental Affairs Committee chairwoman Susan Collins, R-ME, and Sen. Tom Carper, D-DE, introduced comprehensive legislation yesterday to reform the U.S. Postal Service.

A committee markup is scheduled for early June, an aide to Collins said. The bill, not yet numbered, is called the Postal Accountability and Enhancement Act of 2004. A discussion draft was distributed May 12.

The Senate bill is similar to a House bill, H.R. 4341, that passed out of committee May 12. The full House is expected to take up the bill by the end of June.

Both bills repeal a provision requiring that money owed to the USPS because of an overpayment into the Civil Service Retirement System fund be held in an escrow account. Repealing this provision essentially would "free up" $78 billion over 60 years. The USPS would use this money to pay off debt to the U.S. Treasury, fund its healthcare liabilities and mitigate rate increases. If that money isn't released, the USPS has said, it will be forced to seek a double-digit rate increase in 2006.

Similar to the House version, the Senate bill also would return responsibility for funding CSRS pension benefits relating to the military service of postal retirees -- a $27 billion obligation -- to the Treasury Department. No other federal agency is required to make this payment.

The Senate bill differs from its earlier draft in how it addresses work sharing. For example, it now includes exemptions in which work-sharing discounts that exceed avoided costs could be allowed in certain circumstances. The House bill offers this provision but puts a time limitation on the exemptions.

"On work-sharing issues, the Senate bill is slightly more favorable to mailers," said Ed Gleiman, former chairman of the Postal Rate Commission and consultant to the Direct Marketing Association. "This work-sharing discount language is very helpful in terms of moving toward volume growth versus volume loss."

Collins said the legislation will help ensure that the postal service stays viable.

"The postal service is the linchpin of a $900 billion mailing industry that employs 9 million Americans in fields as diverse as direct mailing, printing, catalog production and paper manufacturing," Collins said in a statement.

The bill also:

· Preserves universal service.

· Replaces the current rate-setting process for postal products and services with a rate-cap-based structure to let the USPS react faster to changes in the mailing industry. The caps would be linked to an inflation indicator of the new Postal Regulatory Commission's choosing. The system would apply to market-dominant products only, such as First-Class mail, periodicals and bound printed matter.

· Gives the USPS' Board of Governors the authority to set rates for competitive products, such as Express Mail and Parcel Post, as long as these prices do not result in cross-subsidy from market-dominant products.

· Gives the Postal Regulatory Commission the power to institute emergency price increases because of "unexpected and extraordinary circumstances," such as during the anthrax attacks in 2001.

· Guarantees a higher degree of transparency to ensure fair treatment of customers of the postal service's market-dominant products and companies competing with its products.

· Gives the USPS the authority to transition individuals receiving workers' compensation to a retirement annuity when the person reaches age 65. It also adds a three-day waiting period before an employee is eligible to receive workers' compensation pay. This is consistent with every state-run plan.

· Requires that all future board members be selected based on their ability in managing organizations or corporations of substantial size.

· Requires the USPS to report to Congress and the General Accounting Office with a strategy on how it intends to restructure its infrastructure to reduce excess processing capacity and space.


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