President Bush Signs Senator Collins’ Postal Reform Bill into Law

Earlier today, President Bush signed into law landmark postal reform legislation that was authored by Senator Susan Collins and is the first modernization of the Postal Service in more than 30 years. Senator Collins said that the new law will ensure the continuation of universal postal service at an affordable rate. The bill was coauthored by Senator Tom Carper (D-DE).

Senator Collins’ postal reform bill will modernize the rate setting-process to provide more predictability in postal rates and will help ensure a stronger financial future for the Postal Service.

During the signing ceremony, President Bush recognized Senator Collins, thanking her for her years of work on the legislation.

Senator Collins said, “The U.S. Postal Service is the lynchpin of a $900 billion mailing industry, providing nine million jobs nationwide in fields as diverse as direct mailing, printing, catalog companies, paper manufacturing, and financial services. But under its current business model, which has not been updated in decades, the financial future of the Postal Service is not viable. The only way to avoid what the Government Accountability Office refers to as a ‘death spiral’ – of excessive and unpredictable rate increases which lead to further reductions in mail volume – is through this comprehensive reform.”

The bill represents three years of work by Senators Collins, Carper and others.

Highlights of Senator Collins’ postal reform bill are as follows:

•Replaces the current lengthy and litigious rate-setting process with a rate cap-based structure for market-dominant products such as First-Class Mail, periodicals and library mail. Price changes for market-dominant products would be subject to a 45-day prior review period by the Postal Regulatory Commission (PRC). Under the compromise agreement, after 10 years from enactment, the PRC would have the authority to modify or adopt an alternate system if found to be necessary.

•Grants the Postal Service Board of Governors the authority to set rates for competitive products like Express Mail and Priority Mail, as long as these prices do not result in cross subsidy from market-dominant products. Establishes a 30-day prior review period during which the proposed rate changes shall be reviewed by the Postal Regulatory Commission.

•?Introduces new safeguards against unfair competition by the Postal Service in competitive markets. Subsidization of competitive products by market-dominant products would be expressly forbidden, and an appropriate allocation of institutional costs to competitive products would be required.

•Transforms the existing Postal Rate Commission into the Postal Regulatory Commission with greatly enhanced authority to ensure that the Postal Service management has greater latitude and stronger oversight. Among other things, the Postal Regulatory Commission will have the authority to regulate rates for non-competitive products and services; ensure financial transparency; establish limits on the accumulation of retained earnings by the Postal Service; obtain information from the Postal Service, if need be, through the use of new subpoena power; and review and act on complaints filed by those who believe the Postal Service has exceeded its authority.

•Requires the Postal Service to file with the Postal Regulatory Commission certain Securities and Exchange Commission financial disclosure forms, along with detailed annual reports on the status of the Postal Service’s pension and postretirement health obligations in order to ensure increased financial transparency.

•Reaffirms USPS employees’ right to collectively bargain. This bill only makes changes to the bargaining process that have been agreed to by both the Postal Service and the four major unions. It replaces the rarely used fact-finding process with mediation, and shortens statutory deadlines for certain phases of the bargaining process.

•Puts into place a three-day waiting period before an employee is eligible to receive 45 days of continuation of pay. This is consistent with every state’s workers’ compensation program that requires a three- to seven-day waiting period before benefits are paid.

• Repeals a provision of Public Law 108-18 that required money owed to the Postal Service due to an overpayment into the Civil Service Retirement System Fund to be held in an escrow account, which would essentially “free up” $78 billion over a period of 60 years. These savings would be used not only to pay off debt to the U.S. Treasury but also to fund health care liabilities, and mitigate rate increases.

•Returns to the Department of Treasury the responsibility for funding CSRS pension benefits relating to the military service of postal retirees. No other agency is required to make this payment.