Senate Committee OKs Postal Reform Bill

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The Senate Committee on Governmental Affairs unanimously approved the Postal Accountability and Enhancement Act yesterday.


The bill, crafted by committee chairwoman Susan Collins, R-ME, and Sen. Tom Carper, D-DE, now moves to the full Senate. The bill is similar to H.R. 4341, which passed out of committee May 12. The full House is to take up the bill by the end of June.


"We are pleased that postal reform is finally moving forward," said Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association. "We are finally out of committees in both houses, which is excellent. This is something we haven't had for 30-plus years."


Also, Cerasale said, the bills being approved 40-0 in the House and 17-0 in the Senate tells congressional leaders "that this is a bipartisan bill and deserves to get time on the floor."


Among other elements, S. 2468 would repeal a provision requiring that money owed to the U.S. Postal Service because of an overpayment into the Civil Service Retirement System fund be held in an escrow account. This repeal essentially would free up $78 billion over 60 years.


The USPS has said it would use this money to pay off debt to the Treasury Department, fund its healthcare liabilities and mitigate rate increases. If the money isn't released, the USPS said, it will be forced to seek a double-digit rate increase in 2006.


The 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 bill is even more similar to the House version now that a work-share amendment proposed by Sen. Joseph Lieberman, D-CT, the ranking Democrat on the committee, was approved 9-8. That amendment limits the postal service's ability to grant rate discounts to private sector mailers in excess of the savings the agency would achieve by having mailers do the work -- except in very specific circumstances. The amendment now tracks similar language in the House bill.


Large mailers and the USPS generally oppose this idea. As the legislative process moves forward, "we are still going to be talking about this, but so will everyone else as well," Cerasale said.


Two other amendments were approved unanimously. One, from Sen. Richard Durbin, D-IL, called for a study on potential postal rate incentives for mailers using recycled paper. The other, from Sen. John Sununu, R-NH, called for the Treasury Department to take a greater role in setting accounting standards for postal rate-setting.


"Most nonprofit mailers and consumers won't read all 114 pages of this bill -- or the 120-plus pages in the House bill. Most won't have an opinion on some of the finer points of technical rate-setting or terms of office for postal officials," said Neal Denton, executive director of the Alliance of Nonprofit Mailers. "However, all mailers and consumers will applaud provisions in these bills that aim to prevent a multibillion-dollar stamp tax to pay costs unrelated to postal services and provide postal rate stability in the years to come."


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 newly named 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 more transparency to ensure fair treatment of customers of the postal service's market-dominant products and companies competing with its products.


· Lets the USPS 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' comp pay. This is consistent with every state-run plan.


· Requires that 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.


Also yesterday, the Senate Committee on Governmental Affairs approved the nominations of Albert Casey and James C. Miller III as USPS board governors and Dawn Tisdale for the Postal Rate Commission.


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