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Amended Postal Bill Voted Out of House Committee

A revised version of the Postal Accountability and Enhancement Act of 2005 was unanimously voted out of the House Committee on Government Reform yesterday, following markup of the bill.

Introduced by Rep. John M. McHugh, R-NY, and committee chairman Tom Davis, R-VA, the bill provides a structure to help the U.S. Postal Service achieve future solvency, according to the lawmakers.

“In the 10 years that I have been working in Congress to enact postal reform, we have never had a more workable, effective piece of reform legislation on the table,” McHugh said. “It is my hope that the bill will move quickly to the House floor for a vote.”

Co-sponsors include Reps. Henry Waxman, D-CA, and Danny Davis, D-IL.

Meanwhile, the Senate Homeland Security and Governmental Affairs Committee hearing on postal reform set for April 7 was rescheduled to today.

The hearing is titled “U.S. Postal Service: What Is Needed to Ensure Its Future Viability?” Witnesses include: Timothy S. Bitsberger, assistant secretary of the treasury for financial markets; Roger Kodat, deputy assistant secretary for government financial policy; Dan G. Blair, acting director of the Office of Personnel Management; postmaster general John E. Potter; and David M. Walker, U.S. comptroller general.

Markup of the Senate bill is expected April 20.

The House bill still addresses the Civil Service Retirement System issue. It calls for replacing a provision of the Postal Civil Service Retirement System Funding Reform Act of 2003 requiring that money owed to the USPS because of an overpayment into the CSRS fund be held in an escrow account.

On April 8, the USPS filed a request with the Postal Rate Commission for an across-the-board rate increase of 5.4 percent. The USPS said the increase is needed only to meet the escrow requirement of the 2003 act.

The Postal Accountability and Enhancement Act eliminates the escrow requirement, which should mitigate the effect of the rate increase.

The bill also would return responsibility for funding CSRS pension benefits related to the military service of postal retirees — a $27 billion obligation — to the Treasury Department. No other federal agency has to make this payment.

Since the bill's introduction in January, Davis and McHugh have led a bipartisan effort to resolve concerns raised by the Bush administration, Senate and other stakeholders. The revised version reflects that input while preserving the bill's major elements. Provisions in the amended legislation include:

· SEC-like reporting: requiring the USPS to file with the PRC the same public financial statements and reports required of private companies by the Securities and Exchange Commission.

· Banking, borrowing and investing: limiting the postal service's Competitive Products Fund (created under the bill) to borrowing, banking and investing from the Treasury Department rather than from the private sector.

· Salary cap flexibility: ensuring a more efficient process for establishing the preapproval required under the existing language regarding USPS authority to offer bonuses to employees that is consistent with similar performance incentive programs in other sectors. It also would authorize the USPS Board of Governors to compensate no more than a dozen senior executives at higher levels of pay than permitted under current law.

· Work-sharing: conforming the House bill to the Senate companion bill introduced March 17 by Susan Collins, R-ME, chairwoman of the Senate Homeland Security and Governmental Affairs Committee, and Sen. Thomas Carper, D-DE. The Senate bill eliminates the House bill's five-year limit on new work-sharing discounts that exceed the costs avoided by the USPS due to mailer preparation and transportation. The Senate language is a consensus among Collins, Carper, the USPS, the American Postal Workers Union and large mailers.

Union officials and Waxman preferred the original House bill's handling of work-sharing. But “we are paralleling the approach in the Senate,” said Waxman, who spoke at the markup.

Major provisions of the act remain. They include:

· Modern rate regulation: changing the basis of the PRC from a costly, complex scheme of rate cases to a modern system designed to ensure that rate increases generally do not exceed the annual change in the Consumer Price Index. This applies only to market-dominant products (letters, periodicals, ad mail) because the USPS is given different pricing freedom for its competitive products (Express Mail, Priority Mail, etc.).

· Combining market disciplines with regulation: combining market mechanisms with PRC regulation to govern the rates of competitive products. The language differs with that of the Senate bill. The USPS would get more pricing freedom but lose favored legal treatment for such products.

· Limitations on postal monopoly and nonpostal products: requiring the USPS to offer only postal services and, for the first time, defining what constitutes “postal services.” The bill also revises the postal service's authority to regulate competitors.

· Reform of international mail regulation: clarifying the State Department's authority 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.

· Bolstering the Postal Rate Commission: 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 services.

Another issue remained in the House bill: single-piece parcel post stays in the competitive services category rather than in the market-dominant category as provided in the Senate bill. United Parcel Service, Atlanta, had hoped this would not be changed and issued a statement yesterday in support of the legislation.

The committee adopted an amendment by Rep. Steven C. LaTourette, R-OH, that holds off making changes in the provisions governing the international transport of mail. It also authorizes the General Accountability Office to study and report on the economic effect of this issue on domestic air carriers.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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