Mailers: Postal Reform Bill Has Too Much Wiggle Room

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A House postal reform draft bill scheduled for markup June 20 is receiving opposition from direct marketers, the United Parcel Service and the Teamsters.


The draft consists largely of two previous reform drafts sponsored by Reps. John McHugh, R-NY, and Henry Waxman, D-CA.


According to a copy of the draft, it would create a Postal Regulatory Commission similar to the Federal Communications Commission with broad authority to alter the ratemaking process for First-Class mail and other services in which the U.S. Postal Service has a monopoly. This commission, which would replace the current Postal Rate Commission, also would have subpoena power and more power in regulations and oversight, both through an annual audit and open complaint procedures.


The draft also proposes that the PRC set up a rate system in which average fees could not rise more than inflation without determining, after notice and hearing, that such an increase is reasonable, equitable and necessary.


"Based on what we have seen and heard, I'd say it's a mixed bag," Direct Marketing Association president/CEO H. Robert Wientzen said at the DMA's Catalog Conference and Exposition in Chicago.


"On one hand it includes a provision that seeks to hold the average rate increase for a mail subclass to the Consumer Price Index," he said. "That's great. We've long pushed for a system that limits rate increases to no greater than the rate of inflation as defined by the CPI."


But, he said, "the current draft bill turns right around and includes a 'safety valve' provision that would allow the USPS to request, and the Postal Rate Commission to approve, a hike that is above the inflation rate as they see fit, which is kind of like telling a child not to eat candy before dinner, that is, unless he wants to."


He also said that language added to the bill by Waxman could cut into mailers' workshare discounts. He said the language was added to appease the American Postal Workers Union, which reportedly opposes the discounts because they take work away from its members.


Wientzen also said the draft gives the proposed Postal Regulatory Commission too much control over reform.


"We're more than a little uncomfortable with this approach," he said. "It's kind of like a blind date with bureaucrats, which, personally speaking, isn't too appealing."


Neal Denton, executive director at the Alliance of Nonprofit Mailers, Washington, also had doubts about the rate-setting procedure.


"Is this provision strong enough to press the USPS for greater efficiency and cost controls? Or does it leave room for the USPS to continue to pass along the costs of inefficiencies to ratepayers?" he said. "It would likely depend upon the ability of the PRC to grant a fair and rigid rate-setting procedure."


John C. Campanelli, president of R.R. Donnelley Logistics, Willowbrook, IL, said the draft overall was good.


"As we look through the bill, there are some things we are concerned about [such as the safety valve provision]," he said. "But at the end of the day, the bill is good and has improved since the last go-around."


Meanwhile, UPS and the Teamsters oppose parts of the bill, leading some to wonder whether it will be marked up. They claim the draft gives the USPS too much power and flexibility.


Earlier this month, the USPS Board of Governors announced cautious support for the bipartisan proposal for postal reform legislation.


"Although the bill as proposed does not address all of the legislative needs ... this board supports the bill and looks forward to working with all interested parties through the course of the legislative process," the board said in a statement.


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