Postal Service Bill Bogs Down in Dispute Over Rules for Setting Rates

By Stephen Barr
Wednesday, November 2, 2005

A Senate bill that would overhaul the U.S. Postal Service appears stalled by a dispute over how to ensure that big and small mailers fairly share the burden of mail costs.

Sens. Susan Collins (R-Maine) and Christopher S.Bond (R-Mo.) are at odds over the arcane issue of how to set "fair and equitable" rates, and Bond has put a hold on a bill sponsored by Collins that would revamp postal operations.

The House included a provision calling for fair and equitable rates in its bill, which was approved in July. Bond and other supporters of the provision contend that it is the only way to protect small-volume mailers and consumers from getting hit with high postal rates if the Postal Service needs to cover discount or subsidy costs for bulk mailers.

Collins took a different approach to rate setting in the Senate bill as part of a larger effort to give maximum flexibility to the Postal Service. Her bill would put a cap on overall rate increases by linking them to inflation and, supporters contend, would create a more dynamic business operation in the Postal Service that could take into account changes in technology and the marketplace.

Yesterday, the Postal Rate Commission approved an increase of 2 cents in the price of a first-class postage stamp, to 39 cents. The increase will go to the Postal Service's board of governors for approval, and lobbyists have predicted that it will go into effect in January.

Bond and Collins have met privately on postal rates but reached no agreement, except to keep talking, according to the press secretary for Collins. The dispute, along with lingering concerns by the White House about unrelated provisions, could drag on into next year, some lobbyists said.

The dispute has fractured business interests. For example, L.L. Bean, based in Maine, is backing Collins, and Hallmark cards, based in Missouri, is backing Bond. The companies are part of coalitions that have opposing views on what it takes to ensure fair treatment from the Postal Service, which holds some monopoly powers as a government agency.

The disagreement over the process for setting postage rates has spilled into public just weeks after Postal Service governors complained that the House and Senate bills would give the agency's regulator, the Postal Rate Commission, too much power over the agency's internal operations.

The complaint prompted Rep. Thomas M. Davis III (R-Va.) to ask the rate commission for a response. In a letter this month, George A. Omas , the commission chairman, said that "there is nothing in the language or legislative history of these bills" to support contentions that his regulatory panel "should or would interfere in the day-to-day management of the Postal Service."

Postal headquarters, meanwhile, continues to look for ways to save money and counter the erosion of profitable first-class letters in the era of e-mail. Nine postal facilities are undergoing changes in mail processing as part of consolidations projected to save $11 million annually.

Some of the work in the nine facilities -- in California, Connecticut, Massachusetts, New Jersey and Pennsylvania -- is being shifted to nearby centers because of declining volume or improvements in technology that make it more efficient to consolidate mail processing, said Tom Day , senior vice president for government relations at the Postal Service.

Other postal facilities also may face consolidation in coming months, he said.

"Everything is being done through attrition," Day said. "If we do wind up displacing career employees, we get them into vacancies" at other postal plants, he said.

Diversity Conference

The National Coalition for Equity in Public Service will hold its second annual diversity conference tomorrow in Washington.

The conference, organized in 1994, addresses issues affecting women and minorities in the public sector. Members include Blacks in Government, the Federal Asian Pacific American Council, Hispanic Government Employees and Federally Employed Women.

For information about the conference, call 202-898-0994.

Diary Live Today

Stephen W. Gammarino , senior vice president at the Blue Cross and Blue Shield Association, will take questions and comments about the 2006 Federal Employees Health Benefits Program at noon today on Federal Diary Live at . Please join us.

© 2005 The Washington Post Company