OVERVIEW OF NEW POSTAL REFORM BILL (H.R. 4970 from the last Congress)

The "Postal Accountability and Enhancement Act" incorporates into the well-refined legislative framework of the former Postal Service Subcommittee’s twice-approved bill a bipartisan developed approach to modernizing our nation’s postal laws.

The objective of the bill is to position the Postal Service to operate in a more business-like manner. To achieve this goal, the system must be responsive to market considerations and must provide clear incentives for postal management and the Postal Service as an institution. The Postal Service would no longer operate under a break-even mandate. By maximizing gains and minimizing costs, the Postal Service could generate earnings that would be retained, and which could be distributed as incentives to management as well as employees through collective bargaining. In the same way, losses could not be recovered by increasing rates beyond specific parameters without regulatory approval.

As way of a very general overview, the bill addresses the following seven major issues:

1. Modern Rate Regulation

These provisions shift the basis of Postal Rate Commission ratemaking from a costly, cumbersome scheme of rate cases to a modern system developed by an expert regulatory body under broad policy guidance from Congress. The new system is mandated to ensure that rates generally do not exceed the annual change in CPI, unless an independent regulator concludes the revenue requirements allow it. This regulation is introduced solely for Market Dominant products and services (e.g., letters, periodicals, ad mail) because the Postal Service is provided greater pricing freedom for its truly competitive products (e.g., Express Mail, Priority Mail, parcels).

2. Substitution of Market Disciplines for Regulation of Competitive Products

The legislation proposes to essentially substitute market mechanisms for Commission regulation as the main means of policing the rates of competitive postal products. This concept necessarily implies three elements: (1) the Postal Service is given greater pricing freedom; (2) favored legal treatment for Postal Service products is withdrawn from competitive products; and (3) the primary means of control is transformed from prior regulatory review to ex post facto complaint adjudication.

3. Limitations on: the Postal Monopoly, Postal Service Authority to Provide Nonpostal Products, and Regulation of Competitors

The bill proposes to clarify the authority of the Postal Service to offer nonpostal products and to limit that authority by requiring the Postal Service to only offer "postal services" (as defined for the first time). The bill proposes revisions in the scope of the postal monopoly and the authority of the Postal Service to regulate competitors.

4. Reform of International Mail Regulation

International mail presents several unique issues. The legislation proposes to clarify the authority of the State Department to set international policy, to apply customs laws equally to postal and private shipments, and to give the Postal Service authority to contract with airlines for the transport of international mail.

5. Reform and Strengthening of the Commission

The bill proposes to strengthen the Postal Rate Commission by giving it subpoena power and broader scope for its regulations and oversight, both through an annual audit and open complaint procedures. The PRC is renamed the "Postal Regulatory Commission."

6. Establish a Basis for Future Reforms

The legislation mandates several studies, including a comprehensive assessment of the nation’s postal laws. In particular, the bill establishes a National Commission on the Future of the Postal Service to study and make recommendations on ways to improve the efficiency and longer-term viability of the Postal Service.

7. Miscellaneous Reforms

The bill also includes several minor reforms that are non-controversial, such as permanent authorization of postal police officers, date of postmark to be treated as date of appeal in connection with the closing or consolidation of post offices, and repeal of certain obsolete provisions.