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Postal Reform Bill Needs Work, But Needs to Be Passed

When Senator Tom Carper (D-DE) introduced the Postal Reform Act of 2014, he did so with the co-sponsorship of Republican Senator Tom Coburn, Ranking Member to Carper’s Chairman of the Homeland Security & Governmental Affairs Committee. That bill never got to the Senate floor. 

Now Carper’s back with a new postal reform bill called iPOST, but this time he’s on his own. He has no co-sponsor as yet. Power changed hands in the Senate during the mid-term elections. Carper is now Ranking Member on the committee, and new Chairman Ron Johnson (R-WI) is on record saying he’d rather see the U.S. Postal Service file for bankruptcy before any new legislation is passed. 

Nonetheless, stakeholders in the postal arena view iPOST as an able vehicle for postal reform, though one that will require many modifications and that will travel a long road to passage.“This the beginning of a legislative process. The bill’s got to get through committee and the Senate. There’s got to be a comparable bill in the House. But we’re looking at [iPOST] as a good place to start,” says Gene Del Polito, president of the Association for Postal Commerce.

The president of the America Catalog Mailers Association (ACMA), Hamilton Davison, agrees. “There’s recognition that something needs to be done,” he says. “To some degree, this forces the discussion.”

Though the three main postal industry stakeholders—mailers, labor, and the Postal Service itself—have been conducting closed door discussions on the situation over the past year, each still clings to pet issues that conflict with the others’ priorities.

The National Association of Letter Carriers (NALC) and the National Rural Letter Carriers Association (NRLCA) issued statements saying they had “concerns” with sections of iPost, but were eager to work toward a solution. “While Senator Carper’s new bill contains several provisions we cannot support and raises a number of serious concerns for letter carriers and the larger federal employee community, we believe it is a good place to begin the conversation about how to preserve and strengthen the Postal Service for the American people while protecting the legitimate interests of all the key stakeholders,” NALC President Fredric Rolando said in his statement.

In response to a request for comment on iPOST from Direct Marketing News, the U.S. Postal Service replied with a statement saying it was “particularly gratified that the bill…will ensure that our retiree health benefits program will adopt the best practices of the private sector and fully integrate with MedicareHowever, we cannot support those elements of [Carper’s] recently introduced proposal which expand regulatory bureaucracy and hinder our ability to control costs and respond to a rapidly changing marketplace.”

Mailers’ chief issues revolve around costs and service levels. They’d like service levels to be as high as possible and costs to be as low as possible. The new reform bill offers some hope, and concerns, in both areas.

If passed as is, iPOST would bake the 4.3% exigent surcharge into the base postal rate, but it would also install a freeze on rate increases until the Postal Regulatory Commission devises a new rate setting procedure for 2018, during which span of time PRC would be required to engage a third party to conduct a fierce financial audit of USPS operations. In addition, the bill would “pause” closures of postal facilities for two years and of post offices for five years.

Here’s where the clock ticking on the passage of the bill plays a key role. If a bill is unable to be passed by April of 2016, the exigent surcharge will expire on its own and have to be reinstated with a rate-setting policy wading in lame-duck status. If the bill is passed within that time frame and the Postal Service is freed from the $15 billion it owes the Treasury, as well as future health care pre-payments, the need to curtail services or seek big rate increases will diminish.

“One of the advantages to having a freeze until 2018 is that all the necessary tasks would be done, so they won’t be doing a rate review in an atmosphere in which you think the postal financial world is coming to an end,” says Del Polito. Moving from a six-day to a five-day delivery schedule and making more regular rural deliveries might also be less of an issue, he adds.

Davison worries about the continued cost of exigency and service standards and is eager to see a bill passed that will put mailers on a steady course for decades to come. “While Washington is unpredictable, this is an opportunity for us to get some acceptable reform moving forward,” he says, adding a caveat: “We need to have mailers more involved in this legislation. I tell our people to remember what happened when we weren’t engaged in 2006. The next 25 years of our business could be determined here.” In 2007, following the enactment of the Postal Accountability and Enhancement Act, catalogers saw their rates rise astronomically and some 30% of them went out of business.

The ACMA has designated October 20th for a fly-in of members to Washington to lobby members of Congress on their hopes for what a final postal reform bill might look like.

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