Understanding Postal: What Will Postal Reform Mean to Catalogers?

The long road to getting a bill passed in Washington is rarely smooth. The efforts of the last few years to pass a postal reform bill, whose primary purpose is to efficiently downsize the USPS in light of its diminished use in today's society, has been no exception. During the 112th Congress, the Senate passed a postal reform bill, but the House was unable to counter with one of its own. So far, a year-and-a-quarter into the 113th Congress, a similar pattern has ensued. Here's a recap of where things stood as of press time:

• In early February, the Senate Committee on Homeland Security & Governmental Affairs passed its postal reform bill (S.1486) out of committee.
• On the House side, a draft bill has been circulated, but there's been no activity from the House Committee on Oversight & Government Reform.
• The impact of the exigent postage increase, implemented on Jan. 26, could be influenced by the outcome of postal reform legislation.

American Catalog Mailers Association (ACMA) has been actively involved in trying to shape these bills so they help rather than hurt the mailing industry. The Senate bill includes some Congressionally mandated postal rate increases. The House draft bill, as well as the House's draft bill from the last Congress, also includes some Congressionally mandated rate increases for 
postal products deemed to be underwater. Among those mail categories are Standard Flats, a product used by a good portion of the catalog industry.

On the one hand, ACMA has aggressively encouraged not only its members but the entire catalog industry to continuously explain to their own members of Congress why postal rate increases would be so devastating. On the other hand, getting members of Congress in both Houses to listen and understand can be a challenge. They have a lot of mouths to feed, serving many different special interests. Oftentimes, if you don't spell it out for them that their own districts stand to lose jobs as a result of postage increases leading to fewer catalogs mailed, which in turn leads to lower revenues and eventual layoffs, members of Congress can easily be swayed in directions serving opposite interests.

In the case of postal reform, members of Congress also face a myriad of conflicting viewpoints and concerns. For instance, seems like a no-brainer to shutter a sleepy, money-losing post office, right? Wrong. More often than not, considering that that post office is located in a particular member's jurisdiction, you can bet the member won't want it closed down and risk the local consequences of his or her actions. 
Also, it makes good business sense to drop Saturday letter mail delivery, right? Think again. There are many special interests — e.g., recipients of bulk-shipped prescription meds (mostly elderly), mailers of weekly newspapers — which have vehemently resisted. They've gotten in the ears of Congress, too.

Key Issues for Catalogers
For the Senate postal bill passed out of committee on Feb. 6, ACMA helped rally the catalog industry to support a key amendment proposed by Senator Tammy Baldwin of Wisconsin. Baldwin, whose state is home to a sizable number of catalogers, catalog printers and paper vendors, has made Herculean attempts at improving this bill with an amendment to remove Section 301. Among other things, Sec. 301 called for the following:

• the Jan. 26 exigent postage increase to be permanently "baked in" to the postal rate base in the future — the ruling by the Postal Regulatory Commission (PRC) called for the exigent increase to revert back to previous rate levels within two years;
• subsequent annual postage increases would be in line with the current consumer price index (CPI) plus an extra 1 percent (aka CPI+1) across the board for all mail classes; and
• the PRC's role as regulator of the USPS would be greatly reduced to the point where the USPS would essentially be able to approve its own rate changes.

Aggressive lobbying sometimes bears fruit, sometimes gets you nowhere and sometimes it just leaves a bad taste in your mouth. Thanks to our industry's heavy lobbying, the Committee took heed of Baldwin's amendment. Some debating took place among Committee members, but in the end the amendment was watered down and passed. Senators Tom Carper of Delaware and Tom Coburn of Oklahoma, who as chairman and ranking member, respectively, effectively trumped Baldwin and retained some of their damaging provisions. In brief, they adjusted Section 301 as follows:

• still bakes in exigency permanently as a rate base, with no going back to pre-exigency rate levels (currently it's a two-year surcharge then gone, so this is clearly worse);
• reverts to CPI (eliminates Carper/Coburn's previous desire for CPI+1 percent) and CPI+2 percent by class, but only to 2017 when the CPI rate cap is due to be reviewed;
• in 2017, gives the PRC the power to veto any new rate-
setting process that gets written by the USPS (Carper/Coburn had previously sought to com
pletely strip the PRC of its regulating powers); and
• removes the PRC from prior review of rates — all review is after the fact and only if someone (e.g., a mailer) undertakes an expensive "complaint" case.

The bottom line is that the Carper/Coburn provisions weaken the PRC to the point of effectively leaving the Postal Service as an unregulated government monopoly.

This bill isn't something the mailing industry can support in its present form. We'll try to get a better "manager's amendment" or amend the bill on the Senate floor. Failing any of this, we'll look to get the bill killed altogether, which is sad considering how hard we've worked with both Houses to get meaningful reform passed.

At press time, it was unclear when the full Senate would vote on this bill. As a result of this unfortunate outcome, it's become apparent that we're going to have to do a lot more heavy lifting by mobilizing the catalog industry. The fact remains that mailers are generally not engaged, preferring to let the few do the work of the many … and it's simply not working.

The New Exigency Challenge
The 4.3 percent exigent postage increase the PRC approved late last year (and implemented along with the annual increase on Jan. 26) isn't a dead issue. ACMA and others filed an intent to appeal the exigency matter before the U.S. Court of Appeals. It could be months before we learn of an outcome, but we felt it was worth the fight. That said, depending on what kind of bill ultimately gets passed, the resulting law could pre-empt judicial review of the exigent rate hike.

The catalog industry hasn't historically been a loud force in Washington. We've made some recent inroads, but we need broader participation from all mailers if we're to keep the pressure on; otherwise, there's the distinct possibility we'll end up with a Postal Service that could become too expensive a vehicle for the future distribution of catalogs.

Paul Miller is vice president and deputy director of the American Catalog Mailers Association. Paul previously served as Retail Online Integration's (and Catalog Success’) editor-in-chief from 2006-2009. Paul can be reached at pmiller@catalogmailers.org.