The Postal Reform Act of 2022

The Postal Reform Act of 2022 was signed into law on April 6, 2022. It was a long time in coming. When the 2006 postal reform legislation, for which I played a major industry leadership role, was enacted, we all knew that the legislation was necessary and, on balance, positive for the Postal Service and the industry, but imperfect. From that point forward, advocacy for follow-on legislation continued. I retired at the end of 2008, but my industry colleagues continued advocacy efforts.

The key issues the 2022 Postal Reform Act addressed were these:

• Congress eliminated the requirement that the Postal Service pre-fund retiree medical care for its employees. That pre-funding requirement was inserted into the 2006 Act as an accounting and financial gimmick designed to hide the fact that the Postal Service had overpaid into the Federal Civil Service Employees system for almost 30 years. Since the Postal Service is off-budget for federal government budget accounting, Congress and the White House wanted the 2006 Act to look "budget neutral." By requiring the pre-funding of retiree medical expenses over 10 years, the 2006 Act met the Congressional Budget Office "scoring" system of budget neutrality, which was measured over 10 years. That pre-funding requirement was both a cash drain on the Postal Service and it made the Postal Service look worse off than was actually the case in public financial reporting.
• The 2022 Act moves retired Postal employees on to Medicare, where the rest of us have affordable health insurance. The open-ended retiree medical obligation with which the Postal Service had been saddled is largely gone.
• The Postal Service is now allowed to assist states and municipalities in providing retail services that can be efficiently delivered at its retail outlets. The broad prohibition on the Postal Service getting into unrelated businesses that was important for the 2006 Act's acceptability to our industry was designed to keep the Postal Service from entering businesses in which it had both no inherent capability and an unfair competitive advantage. At the time, many non-US postal operators were dabbling and losing a lot of money in a variety of commercial businesses. We did not want the Postal Service to be tempted to enter businesses which would end up getting subsidized by its core mailing business. At the time, DuetschePost, the German postal operator, was losing significant money in multiple unrelated businesses and charging 75 cents for a first class postage stamp.
• The 2022 law both mandates six-day-a-week delivery service and an integrated letter and package delivery infrastructure. This is a mixed blessing. On the one hand, it results in six-day-a-week uneconomical delivery to many recipient addresses that raises the cost of postage for most of the mailing public. On the other hand, it enables the Postal Service to charge for package delivery at a marginal cost that makes package delivery more affordable for everyone. Since package delivery has become far more important for most of us, the ability to get more affordable package delivery service is a good outcome.

The legislation does not go far enough to give the Postal Service operating flexibility to close retail post offices or to relocate them into large retail outlets that are open longer hours. It also retains ludicrous restrictions on contract postal stations. This morning, I stopped into one of those contract stations in Naples, FL to send a document to the Internal Revenue Service via certified mail, return receipt. I was required to pay cash, even though the retail post office, which is located much farther away from me, accepts credit cards.

This restriction exists solely to placate the American Postal Workers Union, which staffs all retail post offices. The APWU now delivers excellent service at most retail post offices, so it should not be afraid of losing market share to contract postal stations. I believe that contract postal stations are in place for the same reason that companies like Pitney Bowes operate mail presort centers: because the courts have ruled that adding retail post offices and other postal facilities are "major federal actions significantly affecting the environment," which triggers the need for environmental impact statements.

In 1969, the Postal Service was changed from being an executive branch agency like the Department of Commerce or the Department of Health and Human Services to being an "independent establishment of the federal government." Over the last 53 years since that postal reform law was enacted, the Postal Service has never been truly "independent." As I learned from being a Pitney Bowes executive officer for over 20 years, almost no postal operator anywhere in the world has ever been given operating freedom similar to that which a private business enjoys.

Postal services are not only core to commerce, personal and social relationships, the operation of the non-profit sector, the enjoyment and consumption of entertainment, and a major source of educational content, they are vital to the operation of democracy. We could envision a regulatory regime similar to those applied to telecom or electrical utilities, but leaders accountable to voters have always treated postal operators as being so vital to their countries that they are given the privileged status more akin to domestic agricultural producers. We should think of LaPoste, the French postal operator, more like the wine industry based in Bordeaux, as opposed to a French telecom operator.

It is not surprising that this legislation maintains a strong political hand in the operation of the Postal Service. But we are far better off with it than if the 2022 law had not been enacted.

Having been a leader in the legislative advocacy effort that culminated in the 2006 Act, I want to end by thanking all those mailing industry executives and professionals who labored behind the scenes to get the 2022 law enacted. I know it took hundreds of meetings with members of Congress, their staffs, Congressional committee staff members, White House staff members, key "beltway" influencers, law firms and many members of the media to which elected representatives look for validation. I thank them, as well as the leaders of the labor unions and postmasters association, for coming together for a truly bi-partisan effort.