Postal Bill Targets Saturday And Front Door Delivery

July 26, 2013       Mark Hrywna      

The House Committee on Oversight and Government Reform passed a postal reform bill that could pave the way for eliminating Saturday delivery, which the United States Postal Service (USPS) had wanted to implement next month.

The Postal Reform Act of 2013 (H.R. 2748), introduced last week by Oversight Committee Chairman Darrell Issa (R-Calif.), passed by a party-line vote of 22-7 after Wednesday’s markup session. There’s been no movement on legislation in the U.S. Senate. The bill now would have to be called for a floor vote by House Speaker John Boehner (R-Ohio). The measure includes provisions to move toward curbside delivery over the next decade, as well as give the Postal Service a reprieve from pre-funding retirement benefits.

Oversight Committee Ranking Member Elijah Cummings (D-Md.) criticized the bill as partisan and included “extreme provisions,” such as ending Saturday mail delivery and eliminating front-door delivery to most residences by 2022 unless customers agree to pay a new fee. Democrats also have criticized provisions that would hurt labor union members.

The big elephant in the room is the Saturday delivery provision, said Tony Conway, executive director of the Alliance for Nonprofit Mailers. If the Postal Service is allowed to move to five-day delivery, it relieves any need to raise rates in any exorbitant way above the inflation cap. The filing of any proposed rate increase probably would be done sometime in August because it would take 90 days for approval. In conjunction with regular CPI, a rate increase probably will be about 2 percent, he said.

Postal unions are strongly against eliminating delivery on Saturdays as well as phasing out door-to-door delivery. Those two provisions are financially counterproductive because “degrading service would drive mail out of the system and reduce revenue,” National Association of Letter Carriers (NALC) President Fredric Roland said via a statement.

“It’s a membership issue. You’re talking about a lot of postal workers they wouldn’t need anymore,” Conway said of moving to five-day delivery. Through attrition, the postal carrier workforce would be downsized substantially, which he said needs to be done because costs are so high at the Postal Service. Eliminating Saturday delivery has been estimated to save USPS some $2 billion annually, and moving toward more curbside delivery could save another $4 billion by the time it’s implemented in 2022. Some discussion at Wednesday’s hearing turned to the feasibility of cluster boxes in urban areas as well as service consistency among rural and urban areas.

The Postal Services delivers to about 40 million cluster boxes and central locations while making about 54 million curbside deliveries. Both are less expensive, about $160 and $224 per year on average, respectively, than door-to-door delivery of $353 annually. The bill allows for hardship exemptions but there was also discussion about charging fees for door-to-door deliveries in the future.

Due in part to declining mail volume, the Postal Service has been running massive deficits in recent years but another reason is the Congressional requirement that the agency pre-fund retirement benefits. The 2006 postal reform bill required a $5.5 billion payment to pre-fund benefits but the new bill would reduce annual payments by stretching them out, Conway said.

The Postal Service has reached its debt limit of $15 billion and has defaulted on $11.1 billion due for retiree health benefits in 2012, and expects to default on another $5.6 billion at the end of the current fiscal year in Sept. 30. It had an operating deficit of almost $16 billion last year.

The next move for the legislation would be to take it to the floor for a full House vote. “It remains a tough political vote and postal politics are extremely challenging,” Conway said, adding that if it did come up for a vote, it probably would be in the fall when Congress reconvenes. The minority dissent in the committee vote was pretty unified and he would expect a similar party-line vote but the question would be how many Republicans would break from supporting it.

If it makes it through the House, then there’s the matter of getting through the Senate. Conway said Senate Oversight Committee Chairman Tom Carper (D-Del.) wants a bipartisan bill with Ranking Member Tom Coburn (R-Okla.). It’s a little more challenging than it was the last time around, said Conway, because Coburn is much more fiscally conservative than Sen. Susan Collins (R-Maine) who was the ranking member at the time. Coburn sees the postal situation much like Issa, Conway said, and the challenge for Carper is postal’s influence on Democrats.

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