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McHugh Gives Postal Reform Fast Start

Mailers have hope that postal reform will pass quickly this year since Rep. John McHugh, R-NY, reintroduced his reform bill Jan. 4, the first day of the 109th Congress.

H.R. 22, the Postal Accountability and Enhancement Act of 2005, was reintroduced with sponsors Tom Davis, R-VA, Government Reform Committee chairman; Henry Waxman, D-CA, ranking minority member; and Rep. Danny Davis, D-IL.

The legislation originally was crafted by these House members last year. It is almost identical to the bill that passed the Government Reform Committee in 2004 by a 40-0 vote.

The bill again addresses the Civil Service Retirement System issue. It calls for replacing a provision requiring that money owed to the U.S. Postal Service because of an overpayment into the CSRS fund be held in an escrow account. Repeal would free up $78 billion over 60 years, letting the USPS pay off debt to the U.S. Treasury, fund its healthcare liabilities and mitigate rate increases.

If that money isn't released, the postal service has said it will seek a double-digit rate increase for the first quarter of 2006. Many postal experts warn of increases as high as 15 percent, and even more for periodicals. The USPS is expected to file a rate case in April.

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.

“By putting the House version of the bill out there so early in the session, John McHugh has allowed us to hit the ground running and start talking about this stuff literally from day one,” said Neal Denton, executive director of the Alliance of Nonprofit Mailers, Washington.

However, some postal industry insiders were concerned that the bill still contains shortcomings identified by mailers last year. They would have preferred that those issues were addressed before reintroduction.

The alliance and other trade groups as well as mailers were concerned with the final language of the bill regarding the indexed rate cap and the competitive treatment of parcels.

“Our challenge in these first weeks is going to be to make sure that [those] shortcomings are all addressed quickly and folded into the next version of the bill that will be deliberated by the committee,” Denton said.

In the Senate, DMers expect Sen. Susan Collins, R-ME, who chairs the renamed Homeland Security and Governmental Affairs Committee, to reintroduce her postal bill soon. The earliest a bill can be introduced in the Senate is Jan. 24.

Some insiders said reform legislation could pass as early as March while others said May or June. If the USPS files its rate case before legislation is signed into law by President Bush, it can update its revenue requirement.

It also is unknown whether hearings will be held on the bill, which is possible because the Senate committee has four new members. Those members might need to be brought up to speed on the issues. However, the new members — Pete Domenici, R-NM; John Warner, R-VA; Lincoln Chafee, R-RI; and Tom Coburn, R-OK — have experience with postal issues on other committees.

“The hearing issue could have a greater effect on the timing of this whole thing than anything else,” said Bob McLean, executive director of the Mailers Council, Crystal City, VA.

Another big unknown is whether the White House will endorse postal reform legislation. Last year, the administration said the bills in both houses lacked sufficient reform.

McHugh's legislation builds upon the recommendations of the President's Commission on the USPS and the work of the Government Reform Committee's Special Panel on Postal Reform and Oversight, which McHugh chairs. Provisions of the House bill include:

· Ensuring that rate increases generally do not exceed the annual change in the Consumer Price Index.

· Combining market mechanisms with Postal Rate Commission regulation to govern the rates of competitive products.

· Requiring the USPS to offer only postal services and define exactly what constitutes “postal services.”

· Granting the PRC subpoena power and a broader scope for regulation and oversight.

· Mandating several studies, including an assessment of the scope and standards for universal postal services.

· Ensuring the continued existence of the “Within County Periodicals” subclass of mail, upon which community newspapers depend. This provision is a modification from the 2004 bill.

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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